GST is the goods and services tax (GST) which is a value-added tax levied on most goods and services sell for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. In effect, GST provides revenue for the government. The three main pillars of GST are the CGST (Central GST), SGST (State GST) and IGST (Integrated GST) that form the backbone of the Model GST Law. Any kind of transaction means that there will invariably be some movement of goods and hence, the context of the Place of Supply (POS) will obviously come into the picture. GST covers several domains and GST on Ex-Works Sales is one of the main domains that will determine the taxes to be levied based on the place of supply (POS) of goods. Section 7(2) of the IGST Law throws light upon the POS part of the GST Law that goes as under :
The GST council is the key decision-making body that will take all important decisions regarding the GST. The GST Council dictates tax rate, tax relief, the due date of forms, tax laws, and tax deadlines, keeping in mind special rates and provisions for some states. The predominant responsibility of the GST Council is to ensure to have one uniform tax rate for goods and services across the nation.
Article 279A (4) specifies that the Council will make recommendations to the Union and the States on the important issues related to GST, such as, the goods and services will be subject or exempted from the Goods and Services Tax.
They lay down GST laws, principles that govern the following:
•Place of Supply
•Threshold limits
•GST rates on goods and services
•Special rates for raising additional resources during a natural calamity or disaster
•Special GST rates for certain States.
The 32st GST Council Meeting held on 22nd of December, 2018 talk about that the GST (Amendment) Act, 2018 will be effective from, 2019 and as approved by the President of India on, 2018, the following GST laws will be passed :
1.CGST – Central Goods and Services Tax (Amendment) Act 2018
2.IGST – The Integrated Goods and Services Tax (Amendment) Act 2018
3.UTGST – The Union Territory Goods and Services Tax (Amendment) Act 2018
4.The Goods and Services Tax (Compensation to States) Amendment Act 2018
Now 33rd GST Council meeting is which arranged by the finance minister himself is held in date 24th February 2019 .
1] Reduction of GST on under construction inventory
There are reports of slowdown in the sector and low off-take of under-construction houses which needs to be addressed. To boost the residential segment of the real estate sector, following recommendations were made by the GST Council in its 33rd meeting held today:
2.GST rate:
i.GST shall be levied at effective GST rate of 5% without ITC on residential properties outside affordable segment;
ii.GST shall be levied at effective GST of 1% without ITC on affordable housing properties.
3.Effective date: The new rate shall become applicable from 1st of April, 2019.
4.Definition of affordable housing shall be:-
A residential house/flat of carpet area of up to 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities having value up to Rs. 45 lacs (both for metropolitan and non-metropolitan cities).
Metropolitan Cities are Bangalore, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).
5.GST exemption on TDR/ JDA, long term lease (premium), FSI:
Intermediate tax on development right, such as TDR, JDA, lease (premium), FSI shall be exempted only for such residential property on which GST is payable.
6.Details of the scheme shall be worked out by an officers committee and shall be approved by the GST Council in a meeting to be called specifically for this purpose.
7.Advantages of the recommendations made:
The new tax rate in principle was approved by the Council taking into consideration the following advantages:-
i.The buyer of house gets a fair price and affordable housing gets very attractive with GST @ 1%.
ii.Interest of the buyer/consumer gets protected; ITC benefits not being passed to them shall become a non-issue.
iii.Cash flow problem for the sector is addressed by exemption of GST on development rights, long term lease (premium), FSI etc.
iv.Unutilized ITC, which used to become cost at the end of the project gets removed and should lead to better pricing.
v.Tax structure and tax compliance becomes simpler for builders.
8.GST Council decided that the issue of tax rate on lottery needs further discussion in the GOM constituted in this regard.
The decisions of the GST Council have been presented in this note in simple language for easy understanding. The same would be given effect to through Gazette notifications/ circulars which alone shall have force of law.
to 5 per cent. The plan also highlights that the rates should be reduced without the Input Tax Credit (ITC).
- Reduction in GST on cheap houses
The government of India has already received a proposal in regard to the fall of the GST on low- cost houses from 8 per cent to 3 per cent. This scheme also appeals tax reduction without ITC as ITC goes unutilized due to the high tax rates on the raw materials.
The council can also take a decision on the demands of Cement Manufacturers Association in India for lowering the GST on cement from 28 per cent to 18 per cent. Majority of the estate agencies have extended their support to the cement manufacturers as cement is the basic raw material for them and due to the high GST rate, their ITC goes unutilized.
-Duty draw-back scheme for exporters
In the GST regime, compensation for taxes other than the BCD (basic customs duty) is not given to the exporters. Industry insiders have observed that their competitiveness is being affected due to this arrangement. The GST Officials involved in the exercise confirmed that the duty drawback scheme is being prepared after a requisition letter from the DGFT (Directorate General of Foreign Trade) to the Central Board of Indirect Taxes & Customs seeking such relief.
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