- The Union government has set up a seven-member Group of Ministers (GoM) to examine and suggest ways to resolve the issues plaguing the real estate sector after the implementation of the Goods and Services Tax (GST). The GoM headed Gujarat deputy chief minister Nitin Patel.
- A ministerial group formed under the chairmanship of Gujarat Deputy Chief Minister Nitin Patel will discuss the composition plan for the real estate sector along with the possibility of simplifying GST rates.
- To create a composition plan for the real estate sector, the minister will also examine the legality of including the land and various other types of real estate in the composition plan or to keep it separate, as well as suggesting its evaluation system.
- Examine GST levy on Transfer of Development Rights and development rights in a joint development agreement and suitable model.
- Analysis of simplification of GST rates applicable to the ministerial group real estate sector.
- The group will also look into the challenges and issues faced by the real estate sector.
- Suggest a plan of action to address the problems facing both developers and buyers.
- Examine the various aspects of levying GST on the transfer of development rights and development rights in a joint development agreement and suitable model.
- Look at the legality of inclusion or exclusion of land or any other ingredient in the scheme and suggest a valuation mechanism.
- At present, GST is levied at an effective rate of 12% (standard rate of 18% minus 6% abatement for land value) on premium housing and effective rate of 8% (12% minus 4% abatement) on affordable housing on payments made for under-construction property or ready-to-move-in flats where completion certificate wasn’t issued at the time of sale.
- No GST is levied on real estate purchases where completion certificate was issued at the time of sale. An 18% GST is imposed on commercial real estate with no input tax credit being available. All this has created confusion in the minds of buyers and forced them to delay their buying decisions, leading to inventory pile-up and distress in the market.