GST Council & Changes in GST for Real Estate Sector – The Mentor Group
Good & Services Tax Council is the legal authority for making any recommendations to the Union and State Government on issues related to GST. This government body is a one-stop solution for taxpayers, tax consultants, tax officials, finance experts, trade and industry, etc. The council provides transparency, efficiency, and speed in implementation and administration of taxes, especially for the real estate sector. On the recommendations by GST Council in the 34th Meeting held in March 2019 – a new composition tax scheme for Real Estate Sector has been brought in with effect from 1st April 2019. The council has introduced a common GSTN portal which fills the gap between taxpayer and the tax administration. The portal enables the real estate and other taxpayers to cater to registration, return filing, payments, refunds, bill generations and, etc. The following changes have brought to the real estate sector: The builders of the projects will get a one-time option to choose between the new and old rates. This is for constructions which started before the due date. Along with this without the input tax credit, the real estate will be taxed at 5% and 1% for affordable housing. The new scheme states that the registered individuals will procure 80% of the input services for construction. In case it is below that the limit, the developer has to pay the tax at the rate of 18% on RCM basis (and 28% for cement and capital goods). The recent amendments have been done to help the buyers and as well the developers. The services via FSI or long term lease or transfer of development rights that are provided to developers by the landowner have got some exemptions that include all the flats should be sold prior to OC and reverse charge for the residential projects. The taxation would be applicable to the residential property which treated when up to 15% of commercial development is done. The basis for calculating the proportion of construction services (credit attributable to taxable, exempt supplies) will be the area of construction only. As per the meeting held in September 2019 under the Chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman the new changes are introduced which will streamline the process for all sectors. To authenticate the identity of the promoters, developers, and buyers the GST registration linkage with Aadhar is mandatory. GST council has decided to link the Aadhar with taxpayers in phases. For all new registrations, the taxpayers will be asked to provide their Aadhar details. The facility of auto-approval of registration will not be available and the physical verification process will be made mandatory to confirm their identity using other documents in case Aadhar is not provided. The real estate taxation is a matter of concern for both buyers to understand the GST and SGST laws of the state and as well as for the developers who plan to buy land from the owners and get it register at their name. The GST Council website is the one-stop solution for every notification, schemes, FAQ’s, and etc. The transparency of the process will provide information on GST, GST support, MSME information, acts, circulars, forms and rules and etc.

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