The
GST Council on Wednesday deferred a decision on rationalisation of tax rates on
real estate
and lottery till February 24 as some opposition-ruled states demanded
that a meeting, where members are physically present, be convened for
deciding on such crucial issues.
The 33rd meeting of the Council, held through video conferencing, also
decided to extend the
deadline for filing summary sales return - GSTR-3B
- for January by two days till February 22.
"Considering the speed at which returns are getting filed, thousands of
returns being filed every hour, the suggestion before the
GST
Council was to extend the deadline by two days for all states; and
since some areas are facing disturbance, for Jammu & Kashmir it be
extended till February 28. So we took that decision," finance minister
Arun Jaitley said.
The GST Council, headed by Jaitley and comprising state counterparts,
was also slated to discuss the reports of the group of ministers (GoM)
on under-construction housing property and lottery. Ministers from all
states attended the meeting.
Briefing reporters after the meeting of the council, Jaitley said the
report of the GoM on real estate was considered, and since some states
wanted a physical meeting before a final decision is taken on the issue,
hence, a final decision would be taken after a physical meeting on
February 24.
However, GST on lottery was not be taken up for discussion by the council on Wednesday.
"The discussion which remained incomplete today through video
conferencing... Few ministers expressed their opinion and the rest will
express their opinion and we will try and take a decision on this issue
on Sunday. So the meeting stands adjourned as of day for Sunday,"
Jaitley said.
During the meeting, opposition-ruled states like Delhi and Kerala
demanded that a physical meeting be held to decide on crucial issues
like real estate and lottery, while the representative from Punjab
flagged a technical point relating to land cost being included while
deciding on
GST rate.
"I have always followed an approach of moving as per consensus, and
since some of the states wanted a meeting where members are physically
present, keeping the idea of consensus in mind, I adjourned the meeting
to Sunday so that a physical meeting can be held and the same issue will
be discussed on Sunday," Jaitley said.
The GoM on real estate sector, headed by Gujarat deputy chief minister
Nitin Patel, had earlier this month suggested cutting GST on
under-construction residential properties to 5 per cent without input
tax credit (ITC), from 12 per cent, currently. On affordable housing
segment, it suggested that GST be slashed to 3 per cent, from 8 per
cent.
At present, GST is levied at 12 per cent with ITC on payments made for
under-construction property or ready-to-move-in flats where completion
certificate has not been issued at the time of sale.
During the council meeting on Wednesday, the representative from Bihar
suggested that GST on affordable housing segment be brought down to 1
per cent. It also suggested that where 90 per cent area of a property is
used for residential purposes and 10 per cent is used for commercial
purpose, it should be treated as residential property for GST purposes.
The GoM on lottery, under Maharashtra finance minister Sudhir
Mungantiwar, favoured a uniform GST rate of either 18 per cent or 28 per
cent.
Currently, a state-organised lottery attracts 12 per cent GST while a state-authorised lottery attracts 28 per cent tax.
The GoM favoured hiking GST rate on the state-organised lottery to
either 18 per cent or 28 per cent and lowering rate on state-authorised
lottery to 18 per cent or retaining it at 28 per cent.
On Tuesday, Kerala finance minister Thomas Isaac had strongly objected
to the suggestion of the GoM saying this would benefit "lottery mafia"
and that a decision should be taken only during a physical meeting.
"I will walk out of the February 20 Council meeting if any decision is
taken on lottery. Also I will henceforth not attend any Council meetings
till the elections are over. This is not cooperative federalism," Isaac
had said.
Delhi deputy chief minister Manish Sisodia had also written to
Jaitley on Tuesday, seeking that a meeting be held where all members are
physically present.
The two GoMs were set up by the GST Council last month.
PwC India, partner and leader, indirect tax Pratik Jain said
restricting the input credit is not a good idea for any sector,
particularly real estate which requires more formalisation.
"If at all the final decision is to introduce a 5 per cent levy
without input credit, it is important that other related issues such as
reduction in GST rate on cement and on construction contracts are also
deliberated in detail, along with aspects such as treatment of input
credit which may already be accumulated in the books," Jain said.