After the inception of RERA into real estate system, the Central Government is planning to bring real estate under GST. Delivering a lecture at the Harvard University, Finance Minister Arun Jaitley said, “The one sector in India where the maximum amount of tax evasion and cash generation takes place and which is still outside the GST is real estate. Some of the states have been pressing for it. I believe that there is a strong case to bring real estate into the GST.”
The move came in compliance with the Real Estate (Regulation and Development) Act 2016 to bring the much-needed transparency and to check tax evasion in the sector. However, GST is already applicable to properties that are under construction but ready for sale properties are out of the purview of the new tax till now.
This move is welcomed by some of the analysts of real estate and developers but others say that it may impact the demand adversely because the sector is already reeling through the downward pressure for some. Most of the demands are for the ready-to-move-in properties so further implementation of the new tax will make the product more expensive for end users. But according to some analyst, GST could be the biggest boon for property buyers by bringing vastly simplified and transparent tax regime as it applies to the acquisition price of the property.
The council is set to discuss the topic of bringing real estate within the ambit of GST. “In the next meeting itself, we are addressing one of the problem areas or at least having discussion on it. Some states want, some do not. There are two views. Therefore, by discussion, we would try to reach one view”, Jaitley said. Earlier petroleum products, alcohol, and real estate were three sectors which were kept out of the GST as opposed by several states.
On his weeklong stay in the USA Jaitley will participate in annual meetings of the International Monetary Fund (IMF) and the World Bank. India’s growth projections have been downrated by both the agencies recently.