The 34th GST council meeting has been finally concluded on a good note for all the builder community as they have got a relaxed option for the rate cut. The community may choose one of the GST rates before 10th May 2019 in order to avail ITC on the old rate or they can opt for the newer rate without ITC. This was conveyed by the secretary.
The major issues of the real estate sector on which the council had earlier reduced the GST rate from 12 percent to 5 percent while reducing GST rate to 1 percent for the affordable housing sector.
All Major Decision Taken in 34th GST Council Meeting
The 34th GST Council meeting was started at New Delhi via Video-conferencing in which the FM Arun Jaitley was hearing over the issues of the real estate sector and ITC claiming problems by the industrial panel.
Also, the FM Arun Jaitley took help of the finance ministers of all the states for better understanding. In the meeting, it was decided that the council will offer 2 options in which the builders have the choice to adopt the old rate of 12 percent with ITC or new rate i.e. 5 per cent without ITC.
Also if the new rate is chosen, then they have to reverse unutilized credit. (Note that this provision is applicable for only under construction properties, which are not completed till 31st March 2019 | Note: The real estate community can choose either old rate with ITC or new rate without ITC till 10th May 2019)
Also, the council gave the option of 8 percent under the affordable housing scheme with tax rebate while 1 percent with no tax rebate. (For under construction properties, not completed till 31st March 2019 | Note: The affordable housing community can choose either old rate with ITC or new rate without ITC till 10th May 2019)
Starting from 1st April 2019, the latest GST rule on real estate is applicable i.e. 5% on non-affordable housing with No ITC and 1% on affordable housing that is also without ITC.
The council was looking at solutions for the real estate sector as ITC claiming is becoming a contentious issue for the dealers as well as for the builders.
This is the first time, that the meeting of a federal forum is going to hold in between the procedure of general elections and the meeting will take place through a video conference.
The last 33rd GST council meeting took place on February 24, where the GST rates on under construction property were cut down and was slashed to 1% & 5% for affordable houses and other under construction properties respectively.
But this rate abbreviation restricts builders eligibility to avail input-tax credit (ITC) in the value chain, which would reinvite the informal cash mediums to the real estate developers. And so these issues endured the need to set up the proper guidelines for taxpayers which can be finalized through the law review committee and the fitment committee under the GST Council.
The last GST Council meeting lacked in presenting a legal framework on GST rates on real estate. Now with the upcoming rate revision for properties, real estates businesses are expecting the end of hardships they are going through since last 6 years.
The law review committee and the fitment committee under the GST Council would have moved forward with the necessity for builders to get 80% of their inputs from registered dealers in the formal sector. The latest rates and rules will be applicable from April 1.
