Opposition-ruled states such as Delhi, West Bengal, Kerala, Chhattisgarh and Punjab on Wednesday sought to block a reduction in
GST
rate on under-construction houses, arguing that the decision should not
be taken through video-conference. But the Centre and BJP-ruled states
deferred a
decision until Sunday, when the GST Council will reconvene a
meeting to decide on rate rationalisation for a large part of the
real estate sector and lottery.
“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. We will meet on Sunday,”
said
finance minister
Arun Jaitley, adding that he will seek to take a decision based on consensus, which has been the practice so far.
During the last three meetings, Opposition-ruled states have objected
to proposals such as rate reduction and increase in the threshold for
registration for paying GST but later agreed as they did not want to be
seen as anti-consumer, especially ahead of this summer’s general
elections.
The issue of lowering GST for under-construction houses has been
pending with the Council for at least three meetings. It has also been
discussed threadbare by a group of ministers, which had recommended
paring the rate from 18% with input tax credit to 5% without credit for
taxes paid on raw material and inputs such as cement, steel, paint and
sanitary fittings. In case of affordable houses, the rate is proposed to
be lowered from 12% to 3%. Real estate developers have, however, argued
that the withdrawal of input tax credit will impact the affordable
housing segment. After accounting for a set off for the value of land,
the effective rate for affordable houses works out to 8%, while for
other under-construction projects it is 12%.