GoM not in favour of GST relief to real estate sector
Most members in the Group of Ministers (GoM) of the Goods and Services Tax (GST) Council are not in favour of any relief to the real estate sector with regard to the tax incidence on collaborative ventures between developers and land owners. “Most members feel the rate structure should remain as it is for real estate projects under joint development agreements (JDAs), but we will discuss it further in subsequent meetings, before submitting a final report to the GST Council,” a member of the GoM told FE.
On Tuesday, the Council’s nominated GoM, met in Goa to discuss the issue. Pramod Sawant, chief minister of Goa is the convenor of the GoM. The committee was constituted in June to suggest a scheme to “boost the real estate sector under the GST regime.” So far, the GoM has not submitted any report to the Council for consideration.
In JDAs between real estate developers and land owners, GST is typically triggered when possession or rights in the property are transferred, usually at the time of handing over the completed units to the landowner. For such agreements entered into before March 31, 2019, GST at 18% was applicable on the construction services, but the developer was entitled to claim Input Tax Credit (ITC) on taxes paid on inputs used for the project. This ITC mechanism allowed developers to offset the GST liability, making it a more favourable option in terms of tax credit recovery.
