Highlights of 33rd GST Council Meet

Agenda: Real estate & Lottery issue

The 33^rd GST Council meeting was concluded on February 21, 2019 (Wednesday). However, Hon. Finance Minister termed the discussion as inconclusive and then the Hon. Chairman agreed to consider the views of state FMs in the next GST Council meet which has been proposed to be conducted on Sunday (24^th Feb. 2019) in Delhi.

In this GST council meet the Deadline for filing GSTR-3B has been announced to be extended by 2 days.

Due to the postponement, the following topics have become the most considered hot topics to be discussed in the next proposed GST Council Meeting on Sunday (24^th Feb. 2019) to be held in Delhi.

• Discussions and announcement are awaited in connection with disagreement made by Delhi FM on two very important issues, such as lottery and real estate.
• The council may also take major decisions on having a unified tax rate for lotteries. An authorized GoM (Group of Ministers) has suggested having a uniform rate of 18% or 28% for both state-run and state-authorized lotteries. At present, the state-organized lottery attracts 12% GST, while a tax rate of 28% is levied on state-authorize-lotteries.
• The council in its next meeting shall furnish a healthy discussion on a significant proposal recommended by a ministerial panel in respect to bringing down the current 12% GST slab for under-construction properties to 5% GST slab.
• The specialized GoM (Group of Ministers) headed by the Deputy Chief Minister of Gujarat, Mr. Nitin Bhai Patel, has also suggested to reduce the tax rates on affordable homes to 3% or lower from 8%. But it needs to be framed in such a specific way that won’t allow developers to claim any ITC (Input Tax Credit).

Hope the 33^rd GST council meet will be conducted successfully and all the decisions will be announced with a favorable approach. The Indian Govt. has been taking continuous initiatives to finalize the GST structure more convenient and transparent.

GST Council’s decision on the Real Estate Sector (33^rd Council Meet)

This mid-way postponed meeting was re-arranged on 24^th February 2019 (Sunday) (exactly on the Pre-scheduled date) in New Delhi.

Under the envision of “Housing for all by 2022”, the 33^rd GST Council meeting took some major decisions and recommended to boost the residential segment of the real estate sector in the country.

The council recommended the following major points:

1. GST rate:
2. GST shall now be levied at an effective GST rate of 5%, but should not attract any ITC on residential properties outside the affordable segment.
3. GST shall now be levied at an effective GST rate of 1%, but should not attract any ITC on affordable housing properties.
4. Date of Effect: The new rate shall come into effect from 1^stApril 2019.
5. Meaning of Affordable Housing:

A residential house/flat of carpet area of up to 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities worth ₹ 45 lakh (both for metropolitan and non-metropolitan cities).

Note: Currently six cities including – Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, and Faridabad), Hyderabad, Kolkata, and Mumbai (the whole of MMR) have been categorized as metropolitan cities.

4. Exemption on TDR/ JDA, long term lease (premium), FSI:

Intermediate tax on development right, such as TDR, JDA, lease (premium), FSI has now been kept exempted only for such residential property on which GST becomes applicable.

Note: Details of this scheme shall be carried out by a committee of officers and shall be approved by the GST Council in a meeting to be called soon especially for this purpose only.

5. Lottery Tax-rate issue:

The Council decided that the issue related to the tax rate on lottery needs further discussion in the GoM (Group of Ministers) constituted in this matter.

However, it is good to see here what the advantages of these recommendations are.

• House purchasers will get a fair price and affordable housing will get very attractive with GST @ 1%.
• The interest of the purchaser or consumer will be get protected; issues for ITC benefits not being passed to them shall now be removed.
• The problem of Cash flow for this sector has now been eliminated by exempting the GST on development rights, long term lease (premium), FSI etc.
• Complications of unutilized ITC, which used to become cost at the end of the project has been removed now and will lead to better pricing.
• Tax structure and tax compliance become simpler for builders.

Hence, we can see that how the Govt. through its frequent GST Council meetings has been taking the adequate initiative to make the entire GST system more efficient, transparent and beneficial for every stratum of the society.

See the Govt. Notification.