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Government constitutes 7-member GoM to promote real estate sector under GST system

Government constitutes 7-member GoM to promote real estate sector under GST system

A ministerial panel headed by Gujarat Deputy Chief Minister Nitin Patel would look into the possibility of rationalisation of GST rate in real estate sector besides formulating a composition scheme.

It was decided in GST Council meeting on 10 January to set up a 7-member Group of Ministers (GoM) to boost real estate sector under GST regime.

What it will do?

The GoM would analyse tax rate of GST, including issues/challenges in view of the proposal for shoring up the real estate sector.

The panel would also examine the legality of inclusion/exclusion of land or any other ingredient, in composition and suggest valuation mechanism.

It would also examine various aspects of GST on Transfer of Development Rights (TDR) and Development Rights in a joint agreement and suitable model.

GST in Real Estate Sector

Currently, GST is levied at 12 percent 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 percent.

GST, however, 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 input tax credit (ITC) benefit to consumers by way of reduction in price of the property after the rollout of GST.

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