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Naidu bats for service tax exemption to low-cost houses under GST

07 Mar 2017 Evaluate

Coming in support of low cost housing projects, Union Urban Development and Housing Minister M Venkaiah Naidu has proposed to exempt them from service tax under the Goods and Services Tax (GST) regime. Naidu also asked state governments to exempt affordable houses from stamp duty and rationalise it for others. He said that the GST Constitutional Amendment Act also does not provide for it.

While assuring that the GST would not lead to rise in prices and certainly not for the affordable housing segment. Naidu said that at present, affordable housing is exempt from service tax and the ministry is also addressing the need to continue this exemption under GST. Naidu said that there is no clarity on the inclusion of real estate within the ambit of GST, the real estate sector would be benefited from this big reform 'One Nation One Tax'. He also added that after implementation of GST, tax on tax would become a thing of the past. Input tax credit will be available, thus creating a huge incentive to bring all transactions in the sector within the formal system.

Besides, the ministry also recommended that the real estate sector should be taxed at a rate which is revenue neutral and not at a higher tax rate. Further, he stated that with the infrastructure status granted to affordable housing in the Budget, this will act as catalyst for the development of such projects. The GST Council recently approved draft of key supporting legislations to enable rollout of the new indirect tax regime from July 1.


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