Not Real Estate Selling, GST Will Applicable On Land Leasing And Renting

Starting from July 1, leading and renting of land, renting buildings, EMI’s paid for under-construction houses will rope in under Goods and Service Tax. Yet, sale of flats and lands are spared from this enumeration, according to the new indirect tax regulation. This means, you can easily buy flats in Kolkata or purchase any land without GST intervention. Till now government has passed four bill related to GST implementation

1. Integrated GST Bill (IGST),

2. Central GST Bill (CGST),

3. Union Territory GST Bill (UTGST) and

4. The GST (Compensation to the states).

Adding on, 16 cesses and surcharges on central service tax and excise duty have been recently abolished.

Industry experts support government’s new tax regime, as they sees a major transformation to be materialized in Indian economy with the successful implementation. For real estate stakeholders, this brings a little woe as the sector has not included in GST’s effective range. The transactions which as of now are out of the purview of GST will attract the stamp duty as per the new regulation. Finance Minister Arun Jaitley has already introduced this regime on March, 27 for approval before Lok Sabha.
Electricity too has been excluded from GST bounds. Hence, GST includes central excise, service tax and state VAT among other indirect duties on manufactured goods and services.
Summary of the CGST bill – Any lease, tenancy, easement, license to occupy land will be considered as supply of service. Also any lease on building used for commercial purpose including a commercial, industrial or residential unit either partly or totally is a supply service as per the CGST bill. The GST bill won’t consider sale of buildings (not under construction buildings) and sale of land as a supply of goods nor as a supply of services. Thus, GST won’t be levied in these supplies.

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Some tax experts think that it’s a temporary exemption for residential selling. Later on, alike commercial and industrial units residential selling will be counted inside the ambit of GST. Asking on the same, Deloitte Haskins Sells LLP Senior Director M S Mani said: “While service tax is applicable at present on sale of under construction apartments, it is levied on a lower value as abatement allowed. The abatement is ostensibly to take care of the value of the land involved in the construction of apartments”.
Government has also included anti- profiteering clause in the latest GST regime, which streamlines any reduction in the rate on tax on any supply of goods and services, or the benefit of input tax credit, should be passed on to consumers by way of a fair reduction in prices. Real estate industry is expectant to gain a positive impact from this successful roll out.

GST subsumes central duties – excise and service tax and local levies like VAT, entertainment tax, luxury tax. Some states such as Delhi exempt residential units from electricity duty which is applicable on commercial and industrial units.
– By LNN(Liyans News Network)

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