The government is trying to bring real estate sector under the ambit of Goods and Services Tax. According to sources, in the 18 January meeting of GST council, this issue can be discussed. The opinion, which is suggested by the Centre to State government, states that real estate can continue with stamp and property tax, even after GST implementation in this sector.
The central government was kept an agenda to discuss this issue in presentation but due to some reasons, it wouldn’t be possible in the 23rd GST council meeting which was held on 10 November in Guwahati. So we can expect this issue to be discussed at the upcoming GST council’s meeting. As per the sources, this move will increase the revenue collection of India. Where input tax credit is a smart move to benefit airports, hotels, and seaports, real estate will also receive benefits in terms of black money reduction.
For now, the real estate sector is taxed with four types of taxes including stamp duty, service tax, cess on building construction, and property tax on the registration fee. As per the experts, the two taxes including property tax and stamp duty will continue and building cess can be included in the GST range. The state government imposes stamp charges on the property sale and these charges vary from state to state. In few states, the stamp charges are up to 8%.
Even NITI commission mentioned in its three years action agenda about the real estate charges. Sources say that to impose GST on real estates, CGST and SGST provisions may need amendments. However, now it is not sure whether constitutional amendments will be required for this change or not. In this reference, the sources say that law ministry’s suggestion will be considerable.
Before GST imposition on real estates, it is also necessary to define moving and real estate property. This issue of inclusion had been raised by members of council and after that, the council is thinking over the matter deeply. Apart from this, Chief Economic Advisor Arvind Subramanian said that if property and real estates are not added under the GST ambit, black money issue will not stop so easily. Even though, the 13th financial commission also recommended to include both the residential and professional real estate under the GST regime.