Published on : 11 Mar 2019
What is Goods and Services Tax (GST)?
GST is an indirect tax that is levied on goods as well as services. All the existing state and central indirect taxes are subsumed under the GST. It is applicable throughout the country (except Jammu and Kashmir). It is also referred to as “GST as One Nation One Tax”.
Latest update on GST
The 32nd GST Council meeting was held on 10th January 2019 at Delhi. It was chaired by the Finance Minister Shri Arun Jaitley. After the 32nd GST Council, the rates of 29 goods and 53 services were reduced to lower tax slabs.
GST council Finance minister Arun Jaitley announced some major changes in tax rates which provide some relief to a taxpayer. GST council also reduced GST tax rates for service sector (Restaurant, Handicraft & Aviation) to simplify the taxation process and promote ease of doing business.
The main agenda is included the decision to divide between the Centre and State, collections worth Rs. 35,000 crores from the Integrated Goods and Services Tax. The proposal to bring petroleum and diesel products under GST is likely to be considered in the next meeting.
Now, the government has proposed a 4-tier tax structure for all goods and services under the slabs- 5%, 12%, 18%, and 28%.
The overall weighted average of all tax rates decided by the council is much lower than the rates people pay today. After GST Revised rates following are the key constraints where slabbed under this meeting.
|5%||Household necessities such as edible oil, sugar, spices, tea, and coffee (except instant) are included. Coal, Mishti/Mithai (Indian Sweets) and Life-saving drugs are also covered under this GST slab|
|12%||This includes computers and processed food|
|18%||Hair oil, toothpaste and soaps, capital goods and industrial intermediaries are covered in this slab|
|28%||Luxury items such as small cars, consumer durables like AC and Refrigerators, premium cars, cigarettes, and aerated drinks, High-end motorcycles are included here.|
Apart from other items that enjoy zero GST tax rate, these are the commodities added to the list :
5% Tax Slab
Given below are the items that have been added to the 5% GST tax rate slab along with the other existing items-
12% Tax Slab
After the GST council meeting on 11th June, the following items were added to the 12% GST rates category-
18% Tax Slab
The items mentioned below have been added to the 18% GST tax rate slab among the other existing items
28% Tax Slab
The council meeting was held to ‘reduce’ the tax rates on certain items based on customer preferences. Hence, no additional items were added to the highest GST rates slab of 28%
Impact of new GST rates on Real Estate
Initially, under-construction residential properties had a GST rate of 18 per cent and an effective rate of 12 per cent after reducing one-third abatement for the value of land. The final GST for affordable housing was 8 per cent. Ready properties mean the projects which have received occupancy certificate (OC) had no GST.
Now the government has decided to cut GST rates for under-construction property to 5 per cent and is going to give a boost for the demand of residential properties. With the objective of ‘Housing For All by 2022’, the government has reduced GST to marginal 1 per cent for affordable housing while revising the definition of such homes.
Prior to this,
The government is focused on its agenda of pushing affordable homes, which is visible in the decision to reduce GST to a mere 1 per cent for this segment. The lower tax burden on home buyers is expected to push demand in the segment which, in turn, will keep developers committed to building more affordable homes.
So, there you have it! One more reason in 2019 to buy your new home!