GST Council Meet: Relief for home buyers as panel likely to cut tax on residential properties

A group of ministers (GoM) headed by Gujarat Deputy Chief Minister Nitin Patel is scheduled to sit at the goods and services tax council meet on Wednesday.

This is the last GST Council meeting before 2019 Lok Sabha elections. (Image: PTI)

GST Council Meet: A group of ministers (GoM) headed by Gujarat Deputy Chief Minister Nitin Patel is scheduled to sit at the goods and services tax council meet on Wednesday and is likely to propose a reduction of tax on under-construction residential properties at 5 per cent, down from 12 per cent currently. Headed by Patel, the council might also endorse a tax of 3 per cent on the affordable housing category, down from 8 per cent. The GoM will reportedly submit its report regarding the changes in taxation policies at the GST Council meet tomorrow. 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. During the last GST Council meet held in January this year, the proposal to reduce the GST rates was discussed. On the affordable housing segment, it was suggested that GST should be slashed to 3 per cent, from 8 per cent. 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 this 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.