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Bring land, realty, power under GST fold, says CEA Arvind Subramanian




Arvind Subramanian, who for the finance ministry had authored a report on possible tax rates under the Goods and Services Tax (GST), suggested that the new indirect tax set-up should be clean with simple low rates.

NEW DELHI: As the Narendra Modi government wages its biggest war on black money yet, Chief Economic Advisor Arvind Subramanian on Thursday pitched for including land and real estate under the GST regime to check money laundering and corruption.

Arvind Subramanian, who for the finance ministry had authored a report on possible tax rates under the Goods and Services Tax (GST), suggested that the new indirect tax set-up should be clean with simple low rates and should include land and property as well as electricity.

GST, which the government intends to roll out from April 1, 2017, is to subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services, but property and electricity have so far not been talked about as being part of it.

“I still think we should aspire for simple, clean structure of rates which will have on balance lower and higher rates and that will be a necessary complement to fighting against black money that the Prime Minister has launched with demonetisation (of old 500 and 1,000 rupee notes),” he said at a conference here.

He felt that land and real estate need to be part of the GST.

“Stamp duty (on property registration) is separate and states can retain the right to have stamp duty. The sale of land and immovable property should be part of GST so that input tax credit can flow freely in the system,” he said.

This, he said, can “keep the system of self-policing” of black money. “So, it is terribly important that land and real estate being part of the GST,” he added.

Subramanian said there is need to bring electricity charges that are not done by the states under GST.

“I think they should be part of GST and then the input credit can flow and make power more competitive. So, in terms of GST, clean, simple low rates, land, property part of it, power part of it also, will actually be not just important in itself but as a complement to bigger fight against black money and corruption that we embark on,” he said.

Subramanian had recommended a three-tier rate structure for GST, under which some essential goods were to be taxed at a lower rate of 12 per cent and so-called demerit goods such as luxury cars, aerated beverages, pan masala and tobacco products at a higher rate of 40 per cent. All remaining goods were to be taxed at a standard rate of 17-18 per cent.

He had proposed all services to be taxed at the standard rate of 17-18 per cent.

The GST Council, however, has finalized a four-tier tax structure — 5, 12, 18 and 28 per cent.

“I think we need to focus on some of the things that need to be brought into GST — real estate, power. I think we should not lose sight of this because this comes at a time when we want to eliminate black money and corruption,” he said today.

“Given that real estate and land are obvious sources of black money, this will help our overall sources combating black money.”

Source : Economictimes


373 Maharashtra Cities To Fall Under PMAY Scheme




The state of Maharashtra has added 232 cities to the existing 142 which makes it 373 cities under the Pradhan Mantri Awas Yojana Scheme (PMAY).

The officials at the housing department feel that this step will aid the government take up more projects under the PMAY scheme.

Sachin Kulkarni, Builder shared his concerns over the lack of coordination between the department in executing PMAY projects. He said, “This is a good sign. However, the PMO’s seriousness in promoting HFA is diluted by the time it reaches the authorities. Apart from collecting application from interested beneficiaries, nothing has moved on the ground in urban centres. I hope that this initiative moves on fast track”.

Maharashtra CM Devendra Fadnavis recently states that the in order to create more housing stock the state’s Slum Rehabilitation Authority scheme be brought under PMAY so that it can receive the subsidy to create more affordable housing. He clearly mentioned that the government intends to create more housing stock and it was taking various initiatives and making policy changes for it.

Also Read- Affordable Housing To Get A Boost With PMAY’s Scope To Be Extended To Private Lands

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Real Estate Sector May Fall Under GST What Does It Mean For Buyers?




One after the other the real estate sector has witnessed massive policy and law changes in its systems. Nonetheless, the tide has not passed yet. The GST council will take up a proposal to bring it under the uniform nationwide levy.

As the industry is still recovering from the RERA Act, the finance minister, Arun Jaitley said that there is a strong case to include real estate in the new indirect tax regime. He said this last week and also mentioned that GST Council will discuss it in November.

At present, the home buyers are paying 12 percent GST on under-construction properties. This percentage includes two taxes which are stamp duty and registration. The rate of which varies in each state but GST will make them uniform.

Santosh Dalvi, KPMG India partner (indirect tax) said, “If the entire real estate is brought under GST, they would have to abolish the stamp duty and we don’t know how the government plans to compensate the states for their loss.”

The stamp duty with registration and GST comes to approximately 18 percent for under construction properties. He further said, “So, it’s important to look at what rate it will be taxed at. We can then look at consumer prices”.

While agreeing, Bipin Sapra, EY partner (indirect tax), added, “It’s going to be a test for the government”.

Developers also pay taxes on raw materials. However, unlike other businesses, they don’t get any tax refunds through input credit. GST taxes every stage of the business activity to better compliance and compensates for it by permitting refunds.

Anuj Puri, Anarock Property Consultants chairman, said “By including real estate under GST, builders can get a fair amount of input credit, helping bring down costs,” He added that it would make homes cheaper for buyers.

According to Sapra, it will depend on the tax rate applicable.

Niranjan Hiranandani, co-founder of Hiranandani Group said, “Real estate under GST ambit means consumers will only have to pay one final tax.” He stated that with the commencement of RERA it brings transparency and GST would reduce the burden in terms of taxes payable while buying the home. He concluded, “Not only will this create positive sentiment but it should also boost actual sales”.

Also Read: Affordable Housing Is The Changing Face Of Indian Real Estate

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Home Buyers Will Be Covered Against Builders Who Are Going Bankrupt




In a move to protect home buyers from builders declaring their bankruptcy, the Insolvency & Bankruptcy Board of India (IBBI) has amended rules which make it necessary for any company to showcase how they have dealt with interests of all stakeholders. This is directed towards companies like Jaypee Infratech and some of the entities of Amrapali Group.

The regulator has informed about the revised rules last week. This will ensure that banks and other creditors do not get away by protecting their interests at the expense of others who are impacted by the action.  Banks are part of the creditors’ committee. They become an important decision-making body after a company is admitted for bankruptcy.

An expert bankruptcy lawyer said, “The change in the rules has plugged a gap as flat buyers are of the view that there is nothing to protect their interests.”

According to the new law that was enacted last year intends to speed up the resolution process in a period of 180 days, with a possible extension of 90 days. This will be done by appointing insolvency resolution professionals who will take charge of the company’s operations and prepare a plan. As per the law, an information memorandum will be finalized if the creditor’s committee is willing to take applications from other interested companies to take over the company.

The insolvency experts say that the law providing for the plan binds corporate debtor (the company) and its members, employees, guarantors, and creditors, other stakeholders involved in the resolution plan. However, there are no obligations mentioned in the rule to give any treatment to the stakeholders other than the financial creditors (banks) and operational creditors, which includes vendors and others who may have dues.

The National Company Law Tribunal, based on the comfort provided by the revised rules, will choose the final resolution plan based on bids that are received. The lawyer further said, “The tribunal will not clear the resolution plan without giving notice to all stakeholders and the flat buyers can raise objections at that point of time.”

Also Read: Tanvi Group Fail To Deliver Homes And Declare Bankruptcy

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