GST Council meet inconclusive; real estate to be taken up at meeting on Feb 24

GST Council meet inconclusive; real estate to be taken up at meeting on Feb 24

The Goods and Services Tax (GST) Council meeting on February 20 remained inconclusive after some state finance ministers sought a physical meeting as they felt an issue as crucial as a special scheme for real estate sector should not be discussed through a video conference. The meeting will now take place in Delhi on February 24.

“The discussion remained incomplete today through video conferencing. Few ministers expressed their opinion and the rest will express their opinion and we will try and take a decision on this issue on Sunday… I have always followed the approach of moving as per consensus and some of the states wanted meeting where members are physically present, keeping the idea of consensus in mind, I adjourn the meeting to Sunday (February 24),” finance minister Arun Jaitley said after the meeting.

Moneycontrol had on Tuesday reported that as many as six states, including Delhi, Kerala and Punjab have requested Finance Minister and the head of the GST Council Jaitley to postpone the 33rd Council meeting via video conference and call for a physical meeting.

The meeting was also expected to address another issue–single rate of tax on lottery—that some states believe should be taken up in the presence of each and every member of the Council.

There was no discussion on lottery, Jaitley said, adding that both issues will be discussed on Sunday. Currently, the GST Council has 33 members, including Jaitley and state finance minister or any other representative from every state.

Besides, the Council recommended extending the deadline for summary return form GSTR 3B by two days. The Council met today to consider the reports of two ministerial panels pertaining to real estate and lottery.

One of the panels, headed by Gujarat Deputy Chief Minister Nitin Patel has recommended 5 percent GST on under-construction properties and 3 percent tax in case of affordable housing category. However, in both cases, input tax credit (ITC) cannot be claimed.

Currently, GST is levied at an effective rate of 12 percent (standard rate of 18 percent less a deduction of six percent as land value) on premium housing and effective rate of eight percent (concessional rate of 12 percent less a deduction of four percent as land value) on affordable housing on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

“From a policy standpoint, restricting the input credit is not a good idea for any sector, particularly real estate which requires more formalization. Also, if at all the final decision is to introduce a 5 percent levy without input credit, it is important that other related issues such as reduction in GST rate on cement and on construction contracts are also deliberated in detail, along with aspects such as treatment of input credit which may already be accumulated in the books,” Pratik Jain, Partner and Leader Indirect Tax, PwC India said.

The panel headed by Maharashtra Finance Minister Sudhir Mungantiwar has uniformity of taxation on lottery under GST and has recommended 18 or 28 percent tax rate. The final called will be taken by the Council.Under GST, state-organised lottery falls under the 12 percent tax slab while state-authorised lottery attracts 28 percent tax.

[“source=moneycontrol”]