Exempt low-cost housing from service tax under GST: Naidu
Urban Development Minister M Venkaiah Naidu on Monday pitched for exempting affordable housing from service tax under the GST regime so that prices for low-cost homes do not rise.
Naidu, who is also the Minister of Housing and Urban Poverty Alleviation, also asked states to waive stamp duty for affordable housing projects and rationalise it for others.
Addressing the realtors' body CREDAI event, he assured that the GST (Goods and Service Tax) would not lead to rise in prices and certainly not for the affordable housing segment.
"Currently affordable housing is exempt from service tax.
My ministry has already taken up with the Ministry of Finance the need to continue with this exemption under the GST," Naidu said.
The affordable housing has been given infrastructure status in the Budget and this would go a long way in placing more cash in the hands of home buyers and acting as catalyst for the development of such projects in the market, he said.
Naidu said the ministry has also recommended that the real estate sector should be taxed at a rate "which is revenue neutral and not at a higher tax rate".
On industry demand that stamp duty should be included in GST, Naidu said: "We all know states have in their wisdom not adhered to inclusion of stamp duty under GST. The GST Constitutional Amendment Act also does not provide for it".
The minister said although there is no clarity on the inclusion of real estate within the ambit of GST, the real estate sector would be benefited from this big reform 'One Nation One Tax'.
"One big advantage GST is going to bring the industry is that cascading of taxes i.e tax on tax would become a thing of the past. Input tax credit would be available, thus there is a huge incentive to bring all transactions in the real estate sector within the formal system to enjoy credits," he said.
Last week, the GST Council approved draft of key supporting legislations to enable rollout of the new indirect tax regime from July 1.
The Council approved the final draft of Central GST (C-GST) and Integrated GST (I-GST) and will take up for approval the State-GST and Union Territory-GST (UT-GST) laws at its next meeting on March 16.