GST Council has come up with a new provision of bringing the under-construction slab under 5 percent slab. Thus, cutting of the GST rates has enabled more and more people to buy flats at cheaper rates making it accessible to large masses. However, it has been mentioned that inorder to make use of this provision builders will have to purchase 80 per cent material from suppliers having GST number. Thus, for a home buyer, the remarkable move taken by the Goods and Services tax Council i.e. cutting GST rates on real estate has been of great benefit for the common man. However, GST Council is expected to meet in January reaping a positive result.
The role played by the Fitment Committee is of greater significance as it has been working on rationalising the slabs under which commodities are taxed. It is important to note that the first proposal that has been made relates to the fact that lowering of 12 percent of GST and along with that full input tax credit (ITC) needs to be given to the builder. Once the input cost of the land is accounted the GST rate will come down to 8 percent. The second proposal caters to the fact of lowering the GST rate to 5 percent for the customers while builders will be coerced to promote purchases of construction material from GST-complaint entities. At the current stage 18 per cent GST is charged on the real estate sector. But with the prices of the computation of the land the rates have come down to 12 per cent.
It is significant to note that the GST rates have been greatly affected by various political moves as the Modi Government claims to have real electoral dividends from the Real Estate Sector. The Fitment Committee has taken the lead in legally formalizing the entire process. For economically weaker sections and low income groups the Government has provided a Credit Linked Subsidy Scheme who would get concessional GST rate of 8 per cent. Thus, this move has played a greater role in providing economic and social justice to the masses and providing housing and shelter at affordable rates.
Courtesy/By: Debasmita Goswami
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26 Dec 2018
