30.09.2022: GoM on GST issues of Real Estate reconstituted for second time in 3 years

After over three years of existence, a Group of Ministers (GoM) for GST on real estate has yet again got another set of members, including the convenor. Still, there is no word on when the GoM will give its report.

The group will have Maharashtra Deputy Chief Minister Devendra Fadnavis as the convenor. Punjab Finance Minister Harpal Singh Cheema, Finance Minister of Bihar Vijay Kumar Chaudhary and Finance Minister of Gujarat Kanubhai Desai are going to be new members. Finance Minister of Kerala K N Balagopal, Transport Minister of Goa,Mauvin Godinho and Finance Minister of Uttar Pradesh Suresh Kumar Khanna continue to be members.

To study issues

The group was first constituted on January 15, 2019, when the GST Council recommended setting up of a 7-member GoM to study the issues in boosting Real Estate Sector under the GST regime. Four issues were included in the Terms of Reference(ToR). First, the GoM would analyse tax rate of GST, including issues/challenges in view of proposal for ‘boosting real estate sector under GST regime by providing a composition scheme for residential construction units’ as discussed in 32  ndmeeting of the GST Council.

In the said meeting it was said that the proposal was to levy a flat rate of GST at 5 per cent (akin to composition scheme) without Input Tax Credit (ITC) for under-construction flats before the occupation certificate was issued. CREDAI had slightly modified their demand subsequent to their first proposal by stating that either the GST rate at 5 per cent or at 8 per cent with ITC would be appropriate. However, it was said in the meeting that both the proposed tax rates would lead to inverted GST rate structure in the sector leading to refund. The proposal was also discussed in the previous meeting.

The second issue under ToR was to examine and suggest ways for composition scheme or any other scheme, for boosting real estate sector and suggest a scheme for transition vis-à-vis introduction of suggested scheme. The third issue was to examine various aspects regarding levy of GST on Transfer of Development Rights (TDR) and Development Rights in a joint Development Agreement and suitable model. And the fourth issue was to examine legality of inclusion of land or any other ingredients, in composition and suggest valuation mechanism.

Now, the latest OM, issued by Finance Ministry says there is no change in ToR. However, there is no mention of any deadline for submitting the report.

Source: The Hindu Business line 

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