The GST Council is likely to meet for the 33rd time, on 20th February 2019 via video conferencing. The council will meet for the first time post the Interim Budget 2019. Real estate sector is likely to be the prime agenda of the meet.
In the 32nd meeting, the Council had set up a committee to look into the issues relating to taxation that the sector faces. The committee has recently submitted its report.
Following reliefs can be expected:
1. GST Rate slashes on Cement from 28% to 18%:
A rate cut in cement will cause an annual revenue loss of Rs 13,000 crore to the government. The Cement Manufacturers Association India had made requests for a reduction in the GST to 18% continuously. It would boost infrastructure spending and create jobs while reducing the costs of buying a house.
While the analysts claim that cement can be positioned at the 5th to be an essential material accounting for the construction costs, a 10 percentage point reduction in the tax burden will bring significant relief to buyers.
A cut in the GST rate would boost demand and increase revenue collection.
2. GST Rate cut on the supply of under-construction properties as well as affordable houses:
As per the GoM report, there is a proposal to reduce the rates for under-construction homes to 5% from 12%, and in affordable housing to 3% from 8%— but without the Input Tax Credit (ITC).
The primary issue that builders currently face is the balance ITC goes unutilised due to the high tax rate on cement and other raw materials when compared to liability, which attracts the need for a GST refund, a process which is yet to stabilise.
Annapoorna, popularly known as Anna, is an aspiring Chartered Accountant with a flair for GST. She spends most of her day Singing hymns to the tune of jee-es-tee! Well, not most of her day, just now and then.