Realty developers are keenly waiting for today’s GST Council meeting to conclude, with the council likely to deliberate various pending issues concerning the sector, including the much-contested input tax credit benefit.As approved by the Election Commission, today’s meeting has a specific agenda and will deliberate on appropriate rates for under-construction property and seek to clarify positions on transition issues.
In the previous meeting held on February 24, the high-powered GST Council slashed tax rates for under-construction flats to 5 per cent and affordable homes to 1 per cent, effective from April 1.
However, realtors said that there were many grey areas left which needed clarification from the council. The CBIC, earlier this month, had also met many representatives from the sector to discuss these issues and to take the feedback. Developers have sought clarity specifically on input tax credit on projects which are at various levels of completion.
“Since builders will transition to a new rate structure, a lot more clarity is required on how ITC allocations will work (per the old rates), real estate projects are usually in varying degrees of completion and therefore, this is an essential exercise,” Archit Gupta, Founder & CEO, ClearTax said.
Developers are also expecting that finance Minister Arun Jaitley will clarify whether a certain percentage of purchases are required to be made from registered dealers for the new GST rate. The new rules are expected to specify under what circumstances sale transactions initiated in the current tax regime, but concluded after April 1, will be eligible for Input Tax Credit on taxes paid on raw materials and services.
In search of clarity
GST Council to address grey areas in GST levies on real estate
One major issue is ITC applied on projects in various stages
No rate issues on agenda since the model code of conduct is in force