The move comes after the meeting chaired by Urban Development Minister Hardeep Singh Puri last week. It was attended by heads of banks and housing finance institutions, direct and indirect tax authorities, RERA (Real Estate Regulation Act) authorities, senior officials of states, and senior officials of the NITI Aayog.
After the reduction of GST rates on paints and varnishes to 18 per cent from 28 per cent, the NITI Aayog has recommended reduction in the rate for cement as well. Besides, it has suggested bringing the stamp duty within the ambit of the GST.
“The reduction in the rate for paints will give a boost to construction. It should also consider reducing the GST rate on cement to 18 per cent from 28 per cent. Construction is a great employment generator and needs government attention,” said a government official.
The policy think tank has also called for a hike in income tax deduction on interest on housing loans to Rs 350,000 from Rs 200,000 currently. “The Rs 200,000 limit may be increased to Rs 350,000 as this would correspond to the revised housing loan limit under priority lending for affordable housing announced by the RBI recently,” the note by NITI said. Further, it has suggested this deduction be allowed during the period of construction to mitigate hardships of home loan borrowers.
It has also recommended the abolition of the minimum alternate tax (MAT). It has said the high MAT rate neutralised the benefits of various tax schemes to promote the real estate sector.
“The real estate sector is unorganised, highly segmented and localised. Continuity is not guaranteed unlike in other sectors. Therefore, MAT credit in most cases is not availed of. So MAT should either be abolished for the sector for the next few years,” said an official.
It has also made a pitch for bringing the stamp duty under the GST. While there has been an attempt by the Council to take it up, there hasn’t been any discussion on the subject yet. “The stamp duty on immovable property should be brought within the GST ambit and tax payable by purchaser should be rationalised. It will avoid dual levy of taxation in the case of under-construction property."
Besides, the think tank has recommended interim relief from the GST for under-construction property nearing completion till March 31, 2019.
“This limited period of exemption will incentivise builders to expedite completion of projects. In case a builder fails to complete the project by 2019, the applicable GST may be collected with penalties,” said the official.
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After reduction of GST rates on paints and varnishes to 18% from 28%, the NITI Aayog has recommended reduction in the rate for cement too
The NITI Aayog has suggested bringing the stamp duty within the ambit of the GST
The policy think tank has also called for a hike in income tax deduction on interest on housing loans to Rs 350,000 from Rs 200,000 currently