GoM constituted to bring in real estate into GST

GoM constituted to bring in real estate into GST:

A GoM is constituted to bring in real estate into GST. A 7-Member Group of Ministers (GOM) has been constituted for boosting Real Estate Sector under GST regime in pursuance of the decision taken in the 32nd GST Council Meeting held on 10th January, 2019 in New Delhi. At present the real estate is out of the purview of GST although the construction services are taxable. GST is not leviable on immovable property. This was causing a hardship on real estate developers.The flow of input tax credit got stuck due to that. Also the ITC for immovable property is not allowed in GST.

Para 5(b) of schedule II of CGST Act provide the basic criteria to decide the works contract supply.The provision provide that when any part of consideration is received before completion of construction, it will be a works contract service. If the entire consideration is received after the completion it will be an immovable property not leviable to GST.

The criteria of completion is certificate of completion wherever required or first occupation. There was a lot of ambiguity in the provisions. What will be deemed as first occupation? it was not clear. Also the developers were under dilemma on availability of input tax credit.

This step is good for industry. It will simplify the taxation and remove ambiguity. It can also improve the flow of input tax credit.

In last meeting of GST council it was decided to bring the real estate into the net of taxability. This formation is in furtherance of that step.