The GST Council, set to meet on January 10, will decide on bringing under-construction residential properties to 5 percent slab, raising the threshold limit for MSMEs and bringing small service suppliers under the composition scheme.
There are heightened expectations that the Council could decide another round of rate cuts including on products like cement with the industry arguing that the product is a critical construction material and needs to be taxed at a lower 18 percent from the current 28 percent.
“The GST (Goods and Services Tax) Council will meet on January 10 in New Delhi,” said a government official.
In the last meeting on December 22, Jaitley had said that based on the report of the fitment and law committee, Council will decide on GST rate of residential properties, which is currently taxed at 12 percent, with a provision for claiming an input tax credit (ITC).
Currently, homebuyers of real estate properties do not have to pay GST if they purchase a ready-to-move-in property after the issue of completion certificate as it considered as ‘transfer of property’ and comes under state’s jurisdiction of stamp duty.
This generally makes the under-construction property costlier for the buyers.
Jaitley had also said in the next meeting in January, the Council will look at the report submitted by the group of ministers (GoM) headed by MoS Shiv Pratap Shukla on micro, small and medium enterprises (MSMEs).
“One of the proposals is on (increasing) the threshold limit of Rs 20 lakh (annual turnover). Should it be status quo or do we need to alter it,” he said.
Currently, businesses below annual turnover of Rs 20 lakh are exempted from paying GST. The proposal is to increase to increase this threshold for MSMEs.
The Council will also bring small service suppliers under the composition scheme—an alternate method of taxation that allows small businesses with annual turnover up to Rs 1 crore to pay tax at a concessional rate as well as reduce the compliance cost.
An eligible dealer, mainly traders, manufacturers, and restaurants, can pay tax at a prescribed percentage of the business’ turnover every quarter, instead of paying tax at normal rate. However, they are not allowed to claim ITC.
“A composition scheme will be framed for small service suppliers. Threshold and composition charge will be decided by law and fitment committee,” Jaitley had said.
Besides, the GoM on ‘Modalities for Revenue Mobilisation in case of Natural Calamities and Disasters’ headed by Bihar Deputy Chief Minister Sushil Modi, will present its report to the Council next week.
The GoM was set up in line with what the Kerala government had asked after the devastating floods swept through the southern state in August, leading to severe loss of life and property. The panel is expected to devise a mechanism to raise additional funds to help states if they are affected by natural calamities.
Source: Money Control