Realtors want GST for sector be lowered to 6 per cent

NEW DELHI: The National Real Estate Development Council (Naredco) has urged the government to halve the goods and services tax (GST) rate for the real estate sector to 6% to help boost demand for new homes.

At a meeting with finance secretary Hasmukh Adhia and minister of state for finance and shipping, P Radhakrishnan, on Tuesday, the real estate builders’ body said GST rate of 6%, with input tax credit, will be a win-win situation for all stakeholders.

“Capping GST at 6% will incentivise buyers to invest in under-construction properties, who otherwise are waiting for completed properties to save 12% GST,” said Rajeev Talwar, chairman of Naredco. “Buyers stand to benefit as developers would pass on the benefit to the buyers. The government also stands to benefit as it will collect more tax because of increase in demand. This is a win-win situation for all.”

According to Naredco president Niranjan Hiranandani, the industry body has also urged the government to increase the abatement for land cost to 50%, from the existing 30%, as cost of land forms the most significant part of any real estate-project cost.

Builders claim the tax differential between the tax rates for a ready-to-move property and an under-construction property has compounded the problem.

“The GST rate for under construction properties is 12%, whereas for ready-to-move properties it is 0%. This makes the ready-to-move properties lucrative compared with under-construction properties. This, in turn, is translating to reduction in fresh and continuous demand,” Naredco said.

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State Bank of India raises GST challenges in services sector

With the Goods and Services Tax (GST) expected to roll out in July, State Bank of India has raised the challenges of centralised registrations and handling multiple assessment reports.

As banks gear up to face the challenges around the new tax regime, Arundhati Bhattacharya, Chairman of the country’s largest bank, listed out the issues the industry will face before the rollout.


Banks will require at least six to eight weeks to work around the changes including the management of multiple back-end systems, common interpretation readiness on the software front, and providing training to employees to have borderline understanding of laws to build a single stable platform.

“In respect of GST, the fact of the matter is, we are dealing in services,” said Bhattacharya. “To that extent there are certain challenges. First of all, there is no centralised registration. If you look at the other jurisdictions where GST has been rolled out, services always have centralised registration. Here we will need to have 36 registrations for all the 36 states (including Union Territories).”

“For decentralised registrations, automatically the reports or the returns that have to be submitted becomes more. So the people assessing and inspecting you will become that many more,” she added, saying that the government has promised to work around one body consisting of central and state personnel.

According to Siva Subramaniam GV, Vice President and head of product management at SunTec Business Solutions, which provides solutions on banking and financial services, “Banks are already doing the registrations and customers will start driving the registrations which will converge at one enterprise level application which will help centralise the process. One is through the GST network and second would be with the bank.”

The government is working on a concept called Input Services Distribution (ISD) in which some services built centrally by vendors will be accounted centrally by banks and distributed across units using the service.

Companies such as SunTec help provide software applications to meet such integration of all systems alleviate the attributes to facilitate the new tax regime change.

Bhattacharya also pointed out that there is also costing of intra-branch transactions.

She said, “For instance, today you are paying service tax for only on the end product and not paying for the intermediary steps. There is a suggestion that the intermediary steps also have to be accounted for. If that happens then it can become a big difficulty and we are trying to find the best way to getting around it.”

The third challenge Bhattacharya cited was the lack of clarity on the exemptions in the service tax rules such as derivatives, securitisation, etc. which are allowed in the existing rules.

However, experts suggest that the costs and other challenges could be a monetary jerk and may stabilise once the entire tax base widens with more people becoming part of the tax bracket by going digital.

Last week, the government finalised four sets of rules with a draft for public comments on five other aspects released on Saturday. The state and the central bureaucracy will now sit down and fix product-and service-wise rates (called fitment in tax parlance). A decision on most aspects is expected at the next meeting scheduled in Srinagar on May 18-19.

The GST Council has approved a four-slab structure of 5 percent, 12 percent, 18 percent and 28 percent with a cess on tobacco, soft drinks, pan masala, luxury vehicles and coal.

Money Control, 04 April 2017

Treat us like banks on GST, says telecom sector

The telecom sector’s woes are expected to accelerate once the Goods and Services Tax is implemented in July. Given that the industry operates in 22 licensed service areas, it will be faced with multiple jurisdictions while paying GST. In order to avoid this the industry wants to be treated like banks where the revenues are aggregated in one place and then taxed because branches operate in different states.

In an interview with Moneycontrol, Rajan Mathews, Director General of Cellular Operators Association of India, said: “We pay our licence fee and taxes on a LSA (licensed service area) basis. So for the LSA of Delhi, there are three states (Uttar Pradesh, Haryana and Delhi). For Delhi, how many rates would apply given that Delhi is one service area? Similarly, place of origin is also an issue for SIM cards. Give us the same thing you allow for banks. We aggregate everything in one place if we are granted a central clearing mechanism.”

Read All About GST from Beginning

With the rollout of GST in July, the industry also fears that it is the rate of effective tax which will move up from the current 15 percent to 18 percent or more. The sector’s been lobbying hard with the government for lower rates since it is classified as an essential service. The industry has witnessed a sharp fall in profitability and revenues in the last two quarters and higher.

Mathews said: “There are two issues that are emerging – first is the rate and the other is the implementation of GST. If the rate goes above 15 percent, then it will have to be passed on to the consumer. We’ve been saying put us in Category I in the construct of GST, as we are an essential service. Therefore, we should be taxed at a preferential rate of 12 percent.”

The other issue that the industry has been raising with the authorities is the offset mechanism. The industry has been asking for the inclusion of petroleum products for the offset mechanism. Explains Mathews, “When there is no offset mechanism, it pushes up the effective rate of tax. Since we use a lot of diesel we are asking for petroleum products to be used as offset. The moment we have power, the offset can be taken away.”

Money Control, 9 March 2017

Non-life insurance sector looks for lower GST rates

The non-life insurance industry is looking for centralised registration facility and comparatively lower rates for a smooth implementation of GST, a senior official from the sector said.

Goods and Services Tax (GST), which seeks to turn India into a single market for the first time, is likely to be implemented by the Government during the next fiscal.

“In the industry, we are looking for centralised registration facility and lower rates for the implementation of GST,” SBI General Insurance SVP and CFO Rikhil K Shah told PTI.

The lower rate demand is mainly for making the insurance premium affordable, he added.

“The issue of GST implementation will be discussed during the General Insurance Council’s meeting on February 17 in Mumbai,” said the Council’s Secretary General, R Chandrasekaran.

“The idea is to take a stock of the GST update for the industry and its preparedness for implementation of GST,” he added.

According to Chandrasekaran, the meeting will also discuss the industry’s preparedness for Ind-AS (Indian accounting standards), to be implemented from April 1, 2018.

Apart from the Chief Financial Officers of various non-life insurance companies, the meeting will be attended by some consultants who will be making some presentation on the Ind AS, he said.

Talking about SBI General’s preparedness for GST implementation, Shah said the company, in accordance with the Irdai notification, had set up a committee to carry out the smooth implementation of the new accounting system.

“We have appointed an external consultant to manage the implementation project and effective transition from the current accounting practice. We had initiated the process of implementation well in advance to align resources and meet the deadline,” he said.

“To ensure that challenges and problems which will be faced in the conversion exercise are detected at an early point of time, we will be having an appropriate strategy, planning and execution of the project,” he added.

As Ind AS focuses more on the concepts of substance over form and fair valuation, the balance sheet numbers of the insurers would reflect a fairer picture.

According to Shah, “on our preliminary assessment, we feel that fair valuation of investments will increase the balance sheet size.”

Money Control, 16 February 2017

Centre assures realty sector of revenue neutral GST rate

The Centre has assured that the rate of Goods and Services Tax (GST) would be revenue neutral both for real estate developers and consumers, the Confederation of Real Estate Developers’ Associations of India (CREDAI) said on Tuesday.

“The government assured us (CREDAI) the GST rate will be revenue neutral. They are coming out with a model which will be revenue neutral for both developers and customers,” CREDAI’s National President Getamber Anand said here.

“The developers are expected to pay GST equal to what they paid as Vat (value added tax) and excise and consumers will be exempted from state service tax. That is what the government assured us,” Anand said.

He said that the biggest concern was that GST treats real estate as a service while Stamp Act is treating it as a fixed asset. The real estate takes hits from both the sides.

“From the consumers’ point of view, we were arguing that either the Centre subsume stamp duty in the GST or do not levy GST. Only the stamp duty can be levied,” he said.

“The Centre said stamp duty is a state subject so it cannot interfere there,” Anand said.

The apex body of private real estate developers also advocated rationalisation of stamp duty across the country.

In terms of providing skills to the construction workers, the industry body has already trained 50,000 workers and is aiming to train one lakh more workers in the next year, he said.

SME Times, 8 February 2017

Healthcare sector should keep outside the purview of GST : Assocham

Healthcare sector should be kept outside the purview of Goods and Services Tax (GST) as it is likely to make medical care expensive and unaffordable for the common people, industry body Assocham said today.

Healthcare is currently exempted from service tax and a similar dispensation should continue even after the implementation of the GST regime at least for 10 year.

According to Assocham-TechSci Research paper, the sector caters to the unmet health needs of the society and should be kept out of the purview of the GST or else medical care would become expensive and unaffordable for the common people.

“A large number of items like food and other essentials for a common household are being kept outside the purview of the GST. The healthcare is equally important and essential, important only next to food. So, there is a strong case for the sector to be spared the GST,” Assocham Secretary General D S Rawat said.

Government proposes to roll out new indirect tax regime GST from July 1. The GST would subsume excise, service tax, VAT and other local levies and make India a single, uniform market for seamless transfer of goods and services.

The industry chamber also demanded that Finance Minister Arun Jaitley in the forthcoming Union Budget 2017-18 should raise tax exemption on preventive health check-up and announce a healthcare infrastructure medical innovation fund.

It also pressed for raising the tax exemption on preventive health check-up under section 80D of the Income Tax Act, 1961, to Rs 20,000, from current value of Rs 5,000, in order to achieve the aim of universal healthcare coverage.

Additionally, the GST exemption should cover the health insurance premium, as it is exempted from the service tax at present.

The other pre-Budget demand with regard to the healthcare sector includes increasing the depreciation rate on medical devices, equipment from 15 per cent to 30 per cent.

The Indian pharma industry, with an estimated turnover of USD 36.7 billion in 2015, is among the largest producers of pharma products in the world, Assocham said.

The Economic Times, 25 January 2017