The government of Maharashtra isn’t very pleased with the idea of including real estate under the new indirect tax regime of the country and has requested the GST Council, the apex decision-making body, to perform an in-depth study relating to the possible impact of this step on the state finances before taking the final decision.
"Similarly, the Centre and GST Council will have to conduct a study especially on its impact on state revenues. A final decision should be taken only thereafter,'' an official said.
The Council will meet on November 9 when it would most likely consider reducing the rates. Also, there is a possibility that charges on real estate could be lowered and it might also subsume the cost of property registration and stamp duty stated a recent report.
"The state is yet to know whether or not the stamp duty and registration charges will be abolished and only GST will be applicable to the entire real estate sector. If both will be effective, then it may lead to a double taxation. The study should look into the prevailing GST regime in various countries before arriving at a conclusion,'' the official added further.
The data presented by the state government says that it makes over INR 20,000 crore annually by means of registration charges and stamp duty.
This speculation of reduced GST rates has raised apprehensions of developers. Anand Gupta, a senior member of Builders Association of India, said that the government has provided with an explanation which says that one-third of the 18 percent tax is going to be considered as a subtraction instead of the land cost, which is equivalent to 12 percent.
"The finance ministry should bring GST to 5 percent. It will work out to be 11 to 12 percent after payment of stamp duty and registration charges. I hope the GST at its meeting will take a call to subsume the cost of stamp duty or decide cut GST rate to 5 percent,'' Mr. Gupta said.