GST Council Meeting Updates & Latest GST Tax Slabs

  • Blog|GST & Customs|
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  • By Taxmann
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  • Last Updated on 25 June, 2021
Ever since GST was levied, the GST Council meets from the time to time to consider and revise the GST rates levied on various goods and services. These considerations are made on the basis of recommendations made by various industries and state government, in order to streamline the tax structure as well as lessen the tax burden on the taxpayers.
 
As we know, the luxury goods and services are kept in the higher tax bracket of 18-28%. However, on a subsequent scrutiny, it has been found that some of those goods and services can be considered as basic necessities, and hence should not be subjected to high rate of taxes under GST. Similarly, some of the goods and services have been moved to the lower tax brackets in order to give some relief to the taxpayers. 

Real Estate Sector – Decisions taken in the 34th GST Council Meeting:

The major decisions taken in the 34th meeting and its impact on the real estate sector are summarized below:

1. W.e.f. 01-04-2019, GST Rates for Construction of residential complex has been specified as follows: –

(i) Affordable housing which will attract 1% tax without ITC
 
(ii) Other than affordable housing which will attract 5% tax without ITC

2. Criteria and conditions for levy of Concessional GST for Affordable housing:

i)  Definition of Affordable Housing:

A residential house/flat of carpet area of upto 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities having value upto Rs. 45 lacs (both for metropolitan and non-metropolitan cities).
 
Metropolitan Cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).

ii) How to compute Rs. 45 lakhs:

The purchaser is required to pay the amount towards purchase of premises at the time of possession and other charges namely maintenance, electricity, society maintenance charges are also required to be paid. Generally, the builders have been paying tax at the rate of 12% or 8% on amount indicated towards construction and 18% for other charges. Therefore, it appears that in computing the amount of Rs. 45 lacs, the builders shall consider the amount indicated towards sale of flat only & not other charges. For example, maintenance charges will not form part of Rs. 45 lakhs.
 
It must be noted that presently a flat may qualify for concessional rate as “affordable housing”, however the concessional rate may not be applicable w.e.f. 1st April 2019 owing to the condition of Rs. 45 lakhs.
 
iii) New rate of 1% (without ITC) on construction of affordable housing will also be applicable to the affordable houses being constructed in ongoing projects under the existing the Central and State housing schemes i.e. projects which are presently eligible for concessional rate of 8%.
GST Rate Finder
 
 
3. In case of sale of flat, demand notices are raised as per milestones specified in the agreement. As per section 31(5) demand notices are to be raised on or before the milestone specified in the agreement. Thus, if any milestones are achieved in March 2019, then tax is payable at old rate irrespective of the fact that payment from customer may be received on or after 1st April 2019.
 

Other important updates pertaining to GST Council Meetings:

32nd GST Council Meeting: Threshold limit for GST Registration raised to Rs. 40 lakh:

 

The GST council in its 32nd meeting has recommended several changes under GST law in ease of doing business for MSMEs and SMEs. Considering the demand of small industries to raise threshold limit for registration under GST, the GST Council has decided to raise the threshold limit from 20 lakhs to 40 lakhs for GST registration for suppliers of goods. Further, the limit has been raised from 10 lakhs to 20 Lakhs in case of north-eastern and hilly States. However, an option has been provided to States to opt for higher threshold limit, i.e., every State has the right to choose either higher threshold limit (i.e., 40 Lakhs) or to keep same threshold limit (i.e., 20 Lakhs).  

For the latest and updated GST rates, use our GST Rate Finder Tool

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