Finance Minister Piyush Goyal on Thursday hinted at the GST Council bringing the GST rates down for the real estate sector, which has been facing a demand slack. He said the Group of Ministers (GoM) under the GST Council was working out a mechanism for taxing the real estate sector under the GST. "I hope you will like the final consensus of the GoM. In the next meeting of the GST Council soon, it would be discussed," Goyal said. Discussing the issues faced by the real estate sector at a Credai event in New Delhi, Goyal asked banks to meet real estate sector representatives within the next fortnight to discuss the issues being faced by them.
"There is a real problem (being faced by the realty sector)," Goyal said at the event, adding that banks should take some initiatives to assess the projects and fast track them. He suggested that within the next 7-15 days, the Indian Banks' Association (IBA) has a meeting with the real estate players to help increase funding to the sector.
A state ministerial panel last week favoured lowering the GST on under-construction residential properties to 5 per cent, from 12 per cent currently. It also favoured slashing the GST on affordable housing from 8 per cent to 3 per cent. Currently, the GST is levied at 12 per cent with input tax credit (ITC) on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.
The effective pre-GST tax incidence on such housing property was 15-18 per cent. The GST, however, is not levied on the buyers of real estate properties for which completion certificate has been issued at the time of sale. There have been complaints that builders are not passing on the ITC benefit to consumers by way of reduction in price of the property after the rollout of GST, following which the GST Council had set up a ministerial panel to suggest ways to boost realty sector.
Edited by Manali