GST Council Meet today: Panel likely to reduce tax on residential properties; Opposition seeks to defer meeting

GST Council Meet: The council is expected to cut taxes on under-construction residential properties at 5 per cent, down from 12 per cent currently, and ‘affordable housing projects’ from 8 per cent at present to 3 per cent.

The goods and services tax (GST) Council meet today is likely to consider various proposals to reduce tax rates on under-construction residential properties. (Getty images)

GST Council Meet: The goods and services tax (GST) Council meet today is likely to consider various proposals to reduce tax rates on under-construction residential properties. The 33rd GST Council meet will be headed by Finance Minister Arun Jaitley and is said to be the last one implementation of the code of conduct for 2019 Lok Sabha elections. The council is expected to cut taxes on under-construction residential properties at 5 per cent, down from 12 per cent currently, and ‘affordable housing projects’ from 8 per cent at present to 3 per cent. The rates could vary from 1% to 5% with higher rates to be applied on more expensive houses along with absence of input tax credit (ITC) for the builders in case of all categories of houses. During the last GST Council meet held in January this year, the proposal to reduce the GST rates was discussed. However, ahead of the meeting on Wednesday, close to half a dozen states including Kerala, Delhi and Puducherry have sent notes to Jaitley asking for a deferment of the meeting saying a decision on "crucial issues" of GST rates on real estate sector and lottery should not be taken through a video conference meet.  In a letter to Union Finance Minister Arun Jaitley, Delhi Deputy Chief Minister Manish Sisodia said that such "crucial issues" cannot be discussed through a video conference and convening a physical meeting is important to take a consolidated decision. Kerala Finance Minister Thomas Isaac too said that decision on important issue of GST on lottery cannot taken without a fair discussion and the lottery being included in Council agenda only a day before the meeting is unfair. Currently, GST is levied at 12 per cent with an input tax credit (ITC) 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. The effective pre-GST tax incidence on such housing property was 15-18 per cent. However, GST is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale. There have been complaints that builders are not passing on the ITC benefit to consumers by way of reduction in the price of the property after the rollout of GST, following which the GST Council had set up a ministerial panel to suggest ways to boost realty sector. Other members of the committee are West Bengal FM Amit Mitra, Kerala FM Thomas Isaac, Assam FM Himanta Biswa Sarma, Punjab FM Manpreet Singh Badal, Goa Panchayat Minister Mauvin Godinho, Karnataka FM Krishna Byre Gowda and Arunachal Tax and Excise Minister Jarkar Gamlin. The panel is also expected to review tax rate on lottery and favoured a uniform GST rate of either 18 per cent or 28 per cent. A final call on which would be taken by the GST Council at its meeting on February 20. Currently, a state-organised lottery attracts 12 per cent GST while a state-authorised lottery attracts 28 per cent tax.