New Delhi: In a move to aid the real estate sector, the all-powerful GST Council approved Tuesday a transition plan for the implementation of new tax structure for housing projects.
As per the decision taken by the GST Council the developers of residential projects which are incomplete as on March 31, will have option either to choose the old structure with Input Tax Credit (ITC) or to shift to new five per cent and one per cent rates without ITC.
In the previous meeting, February 24, the Council slashed tax rates for under-construction flats to five per cent from 12 per cent and affordable homes to one per cent from effective per cent, effective April 1.
“GST Council today has approved transition plan for the new rate structure for real estate residential projects…from April 1, builders have to choose either of the options for which they will get time,” Revenue Secretary AB Pandey told reporters after the 34th meeting of the GST Council here.
Pandey also stated that Finance Minister Arun Jaitley chaired the meeting with state Finance Ministers via video conferencing.
On the time-frame for transition, Pandey pointed out that the council has agreed on providing a reasonable time to developers. The matter would be decided in a next few days in consultation with the states, Pandey informed and added that it could be 15 days or one month.
On the next GST Council meeting, the Revenue Secretary said that is unlikely till the election process is over. He, however, said that if any emergent situation arises then a meeting could be called with the permission of the Election Commission.
Deloitte India Partner MS Mani said the pragmatic move to segregate under construction projects from new projects would provide relief to builders who were worried about the loss of input tax credit.
“This would also enable them to price the loss of input tax credits in the new projects. Reversal of Input tax credit on a proportionate basis would entail significant computational issues for builders as each project would be in various stages of construction and have differing pre and post completion sale patterns,” Mani pointed out.
PTI
