Tax experts react to 34th Council Meeting announcements on implementation of new tax structure for real-estate

The 34th GST Council Meeting held on March 19 discussed the modalities to implement the recommendations made during its 33rdmeeting for lower GST rate on real estate projects. Council addressed Industry’s major concern of transitioning to the new regime of lower tax rates including credit transition for ongoing projects which opt for new rate.

Huge relief has been provided to the promoters by providing an option to pay tax at old rates for ongoing projects not completed before March 31, 2019 and prescribing that residential real estate projects with commercial space upto 15% shall be taxable at the new rate of 5% without ITC. Given this, the need now arises for number crunching in respect of existing under-construction projects to take an informed decision whether to avail option or not.

Moreover, to keep a check on unregulated procurements, it is announced that 80% procurement of material should be from the registered dealers which implies requirement for increased vendor control. Further, exemption has been provided on Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer subject to the condition that constructed flats are sold before issuance of completion certificate and tax is paid on them.

While it is true that devil lies in details and Industry is eagerly waiting for detailed notifications, the who’s who of the tax world react to the significant developments.