SME Times News Bureau | 17 Jan, 2018
To enhance transparency in property transactions, the GST
Council is expected to bring the real estate sector under the purview of the
unified indirect tax regime GST from April 1 next, an expert has said.
"It could be introduced from 1st April, and the legislative changes could
be done in this (budget) session to facilitate this," CBEC (Central Board
of Excise and Customs) ex-Member V.S. Krishnan told business news channel BTVI
in an interview.
Krishnan said the sector can be brought under the GST as a deemed service.
"Land may not be a service, but what you have is right to use land for
residential construction... therefore, it can be treated as a service,"
Krishnan told BTVI.
"What's going to happen is that the whole transaction is going to become
transparent... which means what has happened after demonetisation, that process
is likely to go forward... in a sense that organised players will
welcome."
Krishnan further said that the GST rate imposed on the sector may not be very
high "because real estate is linked to affordable housing".
"The government may think of 12 per cent. But 12 per cent may have a
backlog with accumulation of credit... because GST paid on land would also be
set off, the GST paid on cement and steel would be set off, and the GST paid in
the earlier process of construction services will be set off," Krishnan
elaborated.
"So, it may be revenue-neutral in the GST side, but it will clean up the
land market, and probably also encourage foreign investors to invest in the
real estate sector."
According to sources, the proposal to include the real estate sector under the
purview of the unified indirect tax regime is expected to be discussed at the
council's meeting to be held in New Delhi on Thursday.