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Why the government wants to include real estate in GST

Here are the reasons why Finance Minister Arun Jaitley personally believes real estate should be brought under GST

By: Express Web Desk | New Delhi | Published: October 12, 2017 4:10 pm
Arun Jaitley, GST, Real Estate, GST Council, Real Estate in GST, Jaitley at Harvard, Business news, Indian Express Boston: Indian Finance Minister Arun Jaitley delivers the Harvard Mahindra lecture at the Harvard South Asia Institute in Boston on Wednesday. PTI Photo. (PTI10_12_2017_000024B)

Finance Minister Arun Jaitley on Thursday said the issue of bringing real estate under the ambit of GST will be discussed by the GST Council next months. He added that there is “maximum” tax evasion and cash generation in the sector, making a strong case for its inclusion. “The one sector in India where maximum amount of tax evasion and cash generation takes place and which is still outside the GST is real estate. Some of the states have been pressing for it. I personally believe that there is a strong case to bring real estate into the GST,” Jaitley, who was delivering the ‘Annual Mahindra Lecture’ at Harvard University, was quoted as saying by PTI.

“In the next meeting itself, we are addressing one of the problem areas or at least (having) discussion (on) it. Some states want, some do not. There are two views. Therefore, by discussion, we would try to reach one view,” Jaitley added. The 23rd meet of the GST Council is scheduled in Guwahati on November 9.

The first reason presented by Jaitley to bring the sector under GST is to help consumers pay one “final tax” on the whole product. “As a result, the final tax paid on the whole product in the GST would almost be negligible,” the finance minister said, reported PTI. Land and immovable property is currently exempted from the uniform tax.

Jaitley reasoned that GST in real estate would prove as an incentive for consumers to enter the tax net. He added that it is likely to help reduce the size of “shadow economy”.

The finance minister also said that India has historically had one of the least efficient tax systems in the world, with a small tax base. “Frankly, over the last several decades, serious efforts, real efforts to expand this base had not been made. You had marginal efforts,” Jaitley said. “In the last few years, the bulk of the increase in tax payers has not been in terms of number of companies but individuals who are coming into the tax net,” he added. The real estate market is expected to touch $180 billion by 2020, according to PTI.

In its last meeting, the GST Coucil reduced rates for over two dozen commonly used goods and services. Jaitley, who had chaired the meeting, said, “Compliance burden of medium and small taxpayers in GST has been cut and the eligibility of Composition Scheme has been raised to Rs 1 crore.”

(With inputs from PTI)

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  1. R
    reboundace
    Oct 14, 2017 at 11:41 am
    This is happy news for those who really doesn’t own any estate. Before reaching developed nation status why this unjustifiable taxing?
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    1. Varun Hirawat
      Oct 13, 2017 at 1:10 am
      Do you ever check where the common man is being robbed by the unique setup of the central and state governments. I give you a solid example - The circle value of Hidco allotted plots in Newtown Kolkata is nearly double the actual market rates. Now why would anyone by a plot there to pay double registration cost and last but not the least the income tax authority would charge the buyers and sellers upon the circle value set-forth by the state govt. The common man is not concerned with the center-state politics. We can clearly see that you play the blame game on each other and share the bounty. You actually loot people and treat them like thieves.
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      1. Varun Hirawat
        Oct 13, 2017 at 12:59 am
        Real estate business was already reeling with so many troubles. After demonitization there is no such tax evasion involved due to cash crunch. Now home buyers are already scared and pulling back from bookings to avoid paying an additional gst which is likely going to be much higher than the existing service tax apart from the registration expenses. The habitual sugar coated words of the FM is very bitter in reality. As in few states there is no vat on development and the market trend was already making developers bite the dust. Stop fooling people in the name of development or reforms or simplifying things. You don't see the ground reality and murdering small businesses like anything. Liars!
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        1. V
          Vijal
          Oct 12, 2017 at 11:56 pm
          This man is a sworn enemy of BJP. He will single handedly bring down the BJP government in 2019.
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          1. I
            Intodeep
            Oct 12, 2017 at 11:38 pm
            Ha haaaaa Gst in real estate will only fill the coffins of government which will be used to fund various schemes and finally the money goes back in the pockets of politicians and other government servants. If you have the fu9king balls then turn complete real estate into white . Not a single rupee should be used for real estate transaction then I will say that your intentions are for real . This bl00dy game we have seen for last 70 years .
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