Guwahati: The government has taken steps to bring this area to the realm of GST due to the burden of cracking black money in real estate and paying the tax on flat tax to flat buyers. The Central Government placed a Power Point presentation on the agenda of the 23rd meeting of GST Council. It is believed that when the real estate GST comes in, the benefits of the input tax credit facility in this area will get the tax burden on the flat.
GST Council sources told that the government had put in a PowerPoint presentation agenda to bring the real estate to the realm of GST, but due to the usual time the Council could not discuss it. It will now be discussed in the next meeting. Giving real estate to the realm of GST will not only bring more revenue to the Central and State Governments, but it will also benefit the businesses like ports, airports and hotels due to the availability of input tax credits. It will also be an important step against black money created in the form of real estate. Chief economic adviser Arvind Subramanyam has also said that if the land and real estate are not brought under the purview of GST then the creation of black money will not stop.
At present, there are four types of taxes and fees, mainly on real estate, which include stamp duty, property tax, registration fees and cess on building. After the GST is implemented, construction cess will be included in the same but property tax will continue as it imposes tax on local bodies. Sources say that the need to amend the CGST and SGST laws to bring real estate to the realm of GST. However, it is not clear whether the constitution will require amendment or not. It will have to get the opinion of the Law Ministry. Before bringing real estate to the realm of GST, the definition of movable and immovable property must also be decided.
Some members of the council had demanded to bring real estate under the purview of GST, after which it is being considered. At present the state government imposes stamp duty on sale of land. The rate of stamp duty is also different in different states. In some states, it is up to eight percent. The Policy Commission has also advocated reducing stamp duty in its three-year action agenda. The 13th Finance Commission also recommended to bring both the residential and commercial real estate sector into tax base. The Commission said that the stamp duty imposed by the state governments should be contained in GST only. However, the Commission had also recommended setting a limit of Rs 10 lakh for exemption of small residential and commercial properties.