THE IMPACT ON AFFORDABLE HOUSING IN GST REGIME

-
Measures for promoting affording housing
“It is proposed to exempt service tax on construction of affordable houses up to 60 square meters under any scheme of the Central or State Government including PPP Schemes.”

 After a prolonged demand from industry, the Central Government announced above incentive and vide Notification no. 9/2016 dated 01stMarch 2016 came up with a scheme of exemption from service tax liability pertaining to low cost houses up to carpet area of 60 sq meters to be developed by private developers.
Before any new project could have seen the light of day under new exemption notification, and start under the new scheme, there comes a GST from 1st of July 2017 whereby this exemption to affordable housing by private builders, from service tax stands omitted in the new list of exempted services approved by GST council.
Thus the group housing projects proposed by private builders up to a carpet area of 60 square meters no longer qualify for exemption in the GST regime. The GST rate for services as approved by GST Council provides for a GST rate of 12 % for construction of housing complex vide Entry no. 19 in GST rate schedule for services without any separate rate structure for affordable housing. Thus there seems to be a U-turn of indirect tax incentive for long demanding sector of affordable housing under the new GST regime. The new GST law doesn’t differentiate affordable housing and luxury housing so far as the same GST rate is applicable on both.
Interestingly the 20 % rate approved by GST council also involves the value of land to compute the taxable value for charging GST. It is in gross violation of the very definition of Supply u/s 7 of the GST law read with schedule III thereto which specifically exclude land from the definition of “goods” as well as “services”. If land is neither good nor service then how can the value of land be included while calculating 12 % GST as approved by GST Council. This very provision to include land value for computing GST is sowing seeds of litigation at the very inception of the roll out of GST from 1st of July 2017 until and unless the government corrects the said schedule and exclude land from the scope of GST rates.
Location: India

Comments

Post a Comment

Popular posts from this blog

An Expert Guide to Stocktaking and Inventory Accuracy

-
Image
  Having problems with inventory accuracy is one of the most common problems faced by retailers. If you this issue can be solved by implementing additional technologies or systems, you are wrong. Although retailers implement various tips and tricks, they cannot eradicate the accuracy issues in stocktaking and inventory. This is primarily because of implementation issues. Poor implementation system might worsen the inventory accuracy situations. If you are planning to implement additional systems to achieve accuracy, we want you to think again. VGNC has extensive experience in the retail industry which allows us to isolate best practices. As trusted experts, we suggest that you need to get your basics right before adding anything new. In this article, we will give you a guide to streamlining your basics to achieve inventory accuracy. Let’s get back to basics. A BriefUnderstanding of Basics If you are trying to list down the basic aspects to maintain higher le
Read more

Ways to Strengthen Internal Audit to Meet Stakeholder’s Needs

-
Image
Internal Audit is one of the critical processes of the businesses. While it helps stakeholders know the exact place where the business stands, the Internal audit also helps in the identification of business operations that need improvement and helps in increasing the revenues its optimisation. But not all businesses are aware of what impact internal audit has on their business especially its relationship with its stakeholders. Often, the audit report fails to truly represent all the essential data and list all identifiable risks about a business enterprise. In such a situation, stakeholders might lose their confidence such reports or the enterprise itself. As an internal audit is a standard process that helps management to take their decisions, a weak audit report will result in weak decision making.  At VGNC , we believe that your business must focus on strengthening internal audit process to be aligned to the needs of the stakeholders and to make well-informed de
Read more

How to Reduce Retail Shrinkage in 2018

-
Image
One of the biggest snags of retail industry all across the globe is shrinkage. This hidden obstacle causes inventory loss which results in supply chain errors not just in India but on all over the world. Shrinkage is classified into two categories – non-crime losses (errors & mistakes) and crime losses. While shrinkage can be caused by internal administrative errors like pricing mistakes, on a darker side shoplifting, employee theft or any other type of theft can be the cause of such loss of inventory. In 2011, Global Retail Theft Barometer found that India was world’s biggest shoplifter which means India was facing highest shrinkage caused by shoplifting. Retail advisors claim the shrinkage is still one of the biggest contributors causing a reduction in profit despite the efforts. Reasons for Shrinkage For those operating in the retail industry, controlling shrinkage is incredibly important. But to bring retail shrinkage under control, one needs to understand the m
Read more