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IGST
Fin Min clarifies why Sushil Modi replaces FM Nirmala Sitharaman as head of IGST Group of Ministers

Fin Min clarifies why Sushil Modi replaces FM Nirmala Sitharaman as head of IGST Group of Ministers

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The Finance Ministry has clarified the reason why Sushil Modi, the deputy chief minister of Bihar, has replaced Finance Minister Nirmala Sitharaman as the convener of a Group of Ministers on Integrated Goods and Services Tax (IGST), as per CNBC-TV18.

The finance minister cannot head the panel since she is the chairperson of the GST Council, it said.

Sources earlier revealed on December 11 that the finance minister was ‘inadvertently’ named as the convenor of the panel. It happened after Sitharaman had had a meeting with deputy chief ministers of Puducherry and Delhi, and finance ministers from Rajasthan, Madhya Pradesh and Punjab on December 4.

The GoM will deliberate on IGST issues of the states and submit its recommendations to Sitharaman.

A modification has been made late Tuesday evening to the constitution of GoM on IGST making Sushil Modi its convener, they said.

Last week, finance ministers and representatives of opposition-ruled states met Sitharaman and expressed their concern over delay in release of GST compensation which has put them in an acute financial position.

The finance ministers of Delhi, Punjab, Puducherry and Madhya Pradesh and representatives of Kerala, Rajasthan and Chhattisgarh attended the meeting over the delay in payment of compensation.

Source: Money-Control.

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GST House rate cut
GST on houses under construction slashed to 5%; affordable housing to attract 1%

GST on houses under construction slashed to 5%; affordable housing to attract 1%

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In a big relief to home buyers, the GST Council on Sunday slashed tax rates on under-construction housing properties to 5 percent without an input tax credit, from the existing 12 percent, finance minister Arun Jaitley said.

The council also cut GST rates on affordable housing to 1 percent from the current 8 percent and expanded the scope of affordable housing to those costing up to Rs 45 lakh and measuring 60 sq meter in metros and 90 sq meter in non-metro cities.

The new tax rates will come into effect from April 1, 2019.

Currently, the GST is levied at 12 percent on payments made for under-construction properties or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

However, builders will not be able to claim the input tax credit (ITC) under the new GST rates.

“This (GST reduction) decision will certainly give a boost to the construction sector,” Jaitley told reporters.

However, Goods and Services Tax (GST) is not levied on real estate properties for which completion certificate has been issued at the time of sale.

With regard to lotteries, the GST Council, however, deferred its decision with Jaitley saying that the Group of Ministers (GoM) will meet again to discuss the proposal.

Currently, state-run lotteries attract 12 percent GST, while state-authorized ones attract 28 percent.

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Source: Times Of India.
GST Council
GST Council Extends Return Filing Date, Defers Decision On Realty Tax

GST Council Extends Return Filing Date, Defers Decision On Realty Tax

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The GST Council on Wednesday deferred a decision on the rationalization 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 is extended till February 28. So we took that decision,” Finance Minister Arun Jaitley said.

The GST Council, headed by Mr. 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, Mr. 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,” Mr. Jaitley said.

During the meeting, opposition-ruled states like Delhi and Kerala demanded that a physical meeting is 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,” Mr 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 percent without input tax credit (ITC), from 12 percent, currently. On affordable housing segment, it suggested that GST is slashed to 3 percent, from 8 percent.

At present, GST is levied at 12 percent 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 the affordable housing segment be brought down to 1 percent. It also suggested that where 90 percent area of a property is used for residential purposes and 10 percent is used for commercial purpose, it should be treated as residential property for GST purposes.

The GoM on the lottery, under Maharashtra Finance Minister Sudhir Mungantiwar, favored a uniform GST rate of either 18 percent or 28 percent.

Currently, a state-organized lottery attracts 12 percent GST while a state-authorized lottery attracts 28 percent tax. The GoM favored hiking GST rate on the state-organized lottery to either 18 percent or 28 percent and lowering rate on a state-authorized lottery to 18 percent or retaining it at 28 percent.

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 a lottery. Also, I will henceforth not attend any Council meetings till the elections are over. This is not cooperative federalism,” Mr. Isaac had said.

Delhi Deputy Chief Minister Manish Sisodia had also written to Mr. Jaitley on Tuesday, seeking that a meeting is 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 formalization.

“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,” Mr Jain said.


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Source: NDTV.
GST
GST Council Likely To Meet Next Week To Discuss Cement Rate Cut

GST Council Likely To Meet Next Week To Discuss Cement Rate Cut

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The GST Council is likely to meet on February 20 to discuss a proposal to slash tax on cement to 18 percent from 28 percent and also consider a recommendation of a Group of Ministers (GoM) on housing that advocates 5 percent GST in under-construction properties and 3 percent GST for affordable housing.
The GoM had earlier recommended 5 percent GST without input tax credit (ITC) on under-construction housing and 3 percent GST without ITC on affordable housing.

A rate cut in cement to 18 percent which is long pending will lead to a loss of Rs. 13,000 crore annually to the government but with election drawing closer, the government is keen to ensure the GST cut benefits the end users in terms of lower prices and low cement prices could lead to low housing costs for the middle class.

The proposed GST cut in cement and the GoM report are on the agenda of the GST Council meeting on February 20, sources said.

The GoM on housing which will also meet once before the GST Council meeting takes place on February 20 could also change the definition of affordable housing to accommodate more poor people under 3 percent tax rate. Currently, affordable houses are defined up to 50 square meters of carpet area which is likely to be increased to 80 square meters to include more people in the category.

Developers and prospective home buyers are expected to gain from this move.

The Cement Manufacturers Association had demanded a cut in GST to 18 percent as it would boost infrastructure spending and create jobs while reducing the costs of buying a house.

Union minister Arun Jaitley had earlier said lowering the tax rate on cement was a priority. Cement is the only commodity used by the common man that is taxed at the highest slab.


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Source: NDTV.com
GST Council
On GST Council table: Tax relief for real estate, duty relaxation for exporters

On GST Council table: Tax relief for real estate, duty relaxation for exporters

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The proposal was discussed in 26th GST Council meeting in March last year and since many technical, legal and administrative issues were identified, its implementation was put on hold.

Duty relaxation for exporters and a tax relief package for the real estate sector are likely to be discussed at the next meeting of the GST Council, which is expected to meet once before the model code of conduct kicks in ahead of the Lok Sabha elections.

Targeting the steady erosion of export competitiveness across segments, which is especially telling in labour-intensive sectors such as textiles and garments, the Centre is readying a proposal for a duty drawback like scheme under the Goods and Services Tax (GST) regime that could comprehensively compensate exporters for embedded taxes.

Also, a ministerial panel set- up last month to analyse tax issues faced by the real estate sector under the GST regime is set to make a strong push for lower tax rates for under-construction residential properties and the affordable housing segment.

Currently, under the GST regime, compensation for taxes other than the basic customs duty (BCD) is not given to exporters, which ends up eroding their competitiveness. Officials involved in the exercise confirmed that the duty drawback scheme is being readied after a letter from the Directorate General of Foreign Trade (DGFT) to the Central Board of Indirect Taxes & Customs sought relief on this count.

After this, a proposal has been sent to the GST Policy Wing for a duty drawback like scheme under GST. GST officials are also discussing contours of the proposed e-wallet scheme for exporters, which was put on hold for six months until October last year.

“A scheme to provide more sops for exporters such as some relief on the front of the additional levy is being worked on. It would be more clarificatory in nature aimed at freeing up the working capital of exporters,” said a government official, adding that the existing export incentive scheme Merchandise Export from India Scheme (MEIS) could be tweaked to give some more sops to exporters.

The Commerce Ministry has been pushing for more relief to exporters including the e-wallet scheme but the Finance Ministry has raised some concerns about the possible misuse by some fly-by-night exporters, said another official. An inter-ministerial meeting regarding the e-wallet scheme for exporters has been scheduled for next week.

The e-wallet scheme or electronic e-wallets will be credited with notional or virtual currency by the DGFT. This notional/virtual currency will be used by the exporters to make the GST/IGST payment on goods imported by them so their funds are not blocked.

The proposal was discussed in 26th GST Council meeting in March last year and since many technical, legal and administrative issues were identified, its implementation was put on hold.

“It will monitor the track record of the exporter and provide relief on taxes paid on inputs. Last time, the discussion stalled as there were concerns about the availment of credit and the exporter having an edge over others since his working capital will be free compared to other exporters,” an official said.

Meanwhile, the Group of Ministers (GoM), under Gujarat Deputy Chief Minister Nitin Patel, set up last month to analyse tax rates and challenges being faced by the real estate sector under the GST regime is leaning in favour of lower rates for under-construction residential properties.

The panel has favoured lowering the GST rate on under-construction residential properties to 5 per cent (without input tax credit) from the present rate of 12 per cent with an input tax credit (after abatement of land) and for affordable housing to 3 per cent from the current rate of 8 per cent.

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Source: Indian Express.
GST rate cut
GoM favours cut in GST to 5% from effective rate of 12%

GoM favours cut in GST to 5% from effective rate of 12%

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Currently, GST is levied at 12 per cent with input tax credit (ITC) on payments made for under construction property or ready to move in flats where the completion certificate has not been issued at the time of sale.

A Group of Ministers (GoM) formed to analyse tax rates and issues being faced by the real estate sector under the goods and services tax (GST) regime has favoured reducing GST rate on under-construction residential properties to 5 per cent without input tax credit from current effective rate of 12 per cent, after abatement of value of land. The panel is also leaning in favour of a lower rate for affordable housing at 3 per cent from 8 per cent at present, a government official said.

The seven-member GoM, headed by Gujarat Deputy Chief Minister Nitin Patel, will finalise its recommendations in 1-2 days and then submit its recommendations to the GST Council, which will take the final decision on the proposal. “The industry players have asked for a higher rate with input tax credit but the ministers felt that the benefits of input tax credit don’t get passed on to homebuyers. That’s why like in the case of restaurants, the GoM has favoured lowering the GST rates on residential houses to 5 per cent without input tax credit and to 3 per cent for affordable housing,” the official said.

Currently, GST is levied at 12 per cent with input tax credit (ITC) on payments made for under construction property or ready to move in flats where the completion certificate has not been issued at the time of sale.

The effective pre-GST tax incidence on such housing property was 15-18 per cent. GST, however, is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale. There have been complaints that builders are not passing on the ITC benefit to consumers by way of reduction in the price of the property after the rollout of the GST.

We want to ensure lower tax rates for housing for the middle class and homebuyers, Gujarat’s Deputy Chief Minister Nitin Patel told reporters after the meeting. Tax experts, however, said this may lead to breaking of inputs tax credit chain as some inputs such as cement are taxed at a much higher rate of 28 per cent.

Pratik Jain, Leader, Indirect Tax, PwC India said, “While the intention of the government is to provide relief to the end customer, from a structural standpoint, it should be ensured that the chain of GST credit is not broken. Perhaps a better approach would be to reduce prevailing GST rate on residential property, say bringing the effective tax rate down to 8 per cent from 12 per cent, while continuing the benefit of input tax credit.”

Abhishek Jain, Tax Partner, EY said, “For real estate properties where the cumulative impact of tax cost on account of denial in credits and 5 per cent output GST rate is lesser than the current 12 per cent rate, this rate cut would be quite positive. But where the cumulative cost is higher than 12 per cent, this rate reduction could entail an increased tax cost.”

The GST Council, headed by the Union Finance Minister and comprising his State counterparts, on January 10 decided to set up the GoM. The other Ministers in the seven-member GoM are the Finance Ministers of Maharashtra Sudhir Mungantiwar, Karnataka’s Krishna Byre Gowda, Kerala’s Thomas Isaac, Punjab’s Manpreet Singh Badal, Uttar Pradesh’s Rajesh Agarwal and Goa Panchayat Minister Mauvin Godinho.

Apart from Patel and Gondinho, Friday’s GoM meeting was attended by Mungantiwar and Badal through video conferencing. Also other state ministers, who are part of the panel, too would be giving their views in a couple of days.


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Source: Indian Express
GOM Panel to discuss GST return simplification on 24th February

GOM Panel to discuss GST return simplification on 24th February

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GST Return Filing

Ahead of the GST Council meeting on 10 March, a ministerial panel under Bihar deputy chief minister Sushil Modi will meet in New Delhi on Saturday to firm up the simplified ‘single-stage’ return filing process.

In the run up to the meeting, key members of the return simplification committee Nandan Nilekani and Central Board of Excise and Customs (CBEC) excise commissioner Manish Kumar Sinha, along with Goods and Service Tax Network (GSTN) chairman Ajay Bhushan Pandey, met finance secretary Hasmukh Adhia on Wednesday.

After the meeting Pandey said over the last two months the return simplification committee has held series of meetings with state governments and trade associations.

“On Saturday, the GoM will meet and discuss various available options on GST return simplification,” he said.

The group of ministers (GoM) under Sushil Modi will look at finalising the simplified return filing system on 24 February, which will be then taken up by the GST Council on 10 March.

“Any system that emerges has to ensure that the government revenue is protected and it has to be convenient for taxpayers,” Pandey said.

It will “mostly be a single-stage” return where invoices would be matched while buyer makes the payment for supplies.

Also Read: GST return simplification to end traders’ woes likely before March 31

The GoM would also consider separate dates of return filing for micro, small & medium enterprises (MSMEs) and large businesses. Pandey, however, said the “feasibility” of doing so has to be looked into.

The new return filing process will be rolled out from the next fiscal after giving suitable time to businesses to adapt to the new software and also to GST Network to develop a new system for glitch free filing of returns.

In the new system, GST returns would be auto-populated based on the invoice details filed by businesses on the GSTN portal.

AMRG & Associates partner Rajat Mohan said after 200 days of GST rollout, the biggest expectation of businesses from the government is stability in the GSTN system for ease in return filing.

“What we expect is that government wants to shift from GSTR 1& 2 to the new machinery of real-time invoice uploading and accepting. This new mechanism will have multiple challenges and multiple risks which include a change in law by way of parliamentary action,” Mohan said.

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Source :  Livemint