GST Council to meet on March 19 to finalise real estate tax structure.
Goods and Services Tax (GST) Council is scheduled to meet on March 19 to finalise guidelines to support the changed tax rate structure for under-construction houses.
This would be the only substantive item that will be taken up, officials in the know said. The meeting will happen via a video conference.
The pending decision to introduce parity in GST rates on government and private lottery is unlikely to feature in the meeting. Sources said the meeting of group of ministers (GoM) mandated to deliberate on the issue of lottery was cancelled at the last moment.
It is learnt that the decision to cancel the GoM meeting was taken to prevent any possible violation of the model code of conduct, which has set in on Sunday following the announcement of general elections to the Lok Sabha by the Election Commission of India.
The law review committee and the fitment committee under the GST Council deliberated on setting up the guidelines for taxpayers after the rates on under-construction houses were slashed in the last Council meeting on February 24. The GST rate for affordable houses was reduced to 1 per cent, while that for all other under-construction houses was reduced to 5 per cent.
The need for detailed guidelines or rules was borne from the fact that the rate reduction made builders ineligible to avail input-tax credit (ITC) in the value chain, which would bring back informal cash channels to the real estate business.
The committees are said to have gone ahead with the mandatory requirement for builders to procure 80 per cent of their inputs from registered dealers in the formal sector. The new rates and rules come into force on April 1.
In addition, the rules would specify the extent to which the opening input-tax credit on April 1 could be used by builders. It is likely that the Council would take a decision to utilise credit to the extent of the completion of the housing project.
Experts said the projects that are nearing completion would benefit the most from the rules, which are learnt to have been submitted to the GST Council. It is yet not known as to which authority would certify the extent of completion, but experts said it would be subject to audit nonetheless.
The guidelines would also have the methodology to deal with properties which have a mix of residential and commercial spaces.