GST Coun­cil to take up real es­tate in Novem­ber meet­ing

Aad­haar could be made manda­tory for buy­ing in­ter­na­tional air tick­ets, cars

Business Standard - - FRONT PAGE - DILASHA SETH

Real es­tate, a sec­tor prone to tax eva­sion, might soon come un­der the goods and ser­vices­tax(GST) net.

The G ST Coun­cil would con­sider this at its next meet­ing on Novem­ber 10 in Guwa­hati, fi­nancem­i­nis­ter ArunJait­ley saidonWed­nes­day— ear­lyThurs­day morn­ing in In­dia—at Har­vard Univer­sity.

While de­liv­er­ing a lec­ture on tax re­forms in the coun­try, he called the tax­a­tion sys­tem in In­dia one of the least ef­fi­cient in the world, with a very small tax base. He also hinted at mak­ing Aad­haar manda­tory for buy­ing a car or in­ter­na­tional air tick­ets in the fu­ture, tak­ing a cue from the re­cent Supreme Court judge­ment.

The GST was rolled out on July 1, re­plac­ing a large num­ber of in­di­rect taxes with one uni­fied tax of five rates. Pe­tro­leum, real es­tate, and al­co­hol were kept out of its am­bit.

“The one sec­tor in In­dia where max­i­mum amount of tax eva­sion and cash gen­er­a­tion takes place and which is still out­side the GST is real es­tate. Some of the states have been press­ing for it. I be­lieve that there is a strong case to bring real es­tate into the GST,” Jait­ley said.

The stamp duty, which is out­side the GST, has com­pli­cated the tax struc­ture for real es­tate. A lot of states had op­posed the in­clu­sion of the stamp duty in the GST, as it was a source of rev­enue for them.

“Somes­tateswant; some­donot. There are two views. There­fore, by dis­cus­sion, we would try to reach one view,” he­said.

A 12 per­cent GS Tis levied on construction ofa­com­plex, build­ing, or civil struc­ture in­tend­ed­for­sale, whol­ly­or­partly. How­ever, land and other im­mov­able prop­erty have been ex­empted from the G ST. If real es­tate is brought un­der the G ST, the fi­nal tax would be al­most neg­li­gi­ble, Jait­leyadded.

The FMis on a week-long visit to the US, where he will at­tend the an­nual meet­ings of the In­ter­na­tional Mone­tary Fund and the WorldBank. Ear­lier, Jait­ley had said bring­ing real es­tate un­der the G ST was eas­ier than pe­tro­leum.

Jait­ley said there would have to be some link between life­style and ex­pen­di­ture, and taxes paid, in the fu­ture. “Un­ques­tion­ably and his­tor­i­cally we have had one of the least ef­fi­cient... tax sys­tems [of] any coun­try in the world.”

The FM also spoke of mak­ing A ad ha ar manda­tory for buy­ing cars or in­ter­na­tional air tick­ets. Ac­cord­ing to one ju­di­cial opin­ion, this might be treated as an ex­cep­tion to the law of pri­vacy, keep­ing the rev­enue in­ter­ests of the state in mind.


“You have 12-15 mil­lion cars be­ing bought ev­ery year. You have 20 mil­lion peo­ple trav­el­ling over­seas ev­ery year. And, if you com­pare it with the spend­ing data, the base it­self is ex­tremely nar­row,” he said.

Jait­ley also spoke on rev­enue col­lec­tion un­der the GST and de­mon­eti­sa­tion.

He said in the first month since the GST roll-out, only 5.5 mil­lion peo­ple had filed re­turns and 40 per cent as­sessees had paid no tax. “So even now... the habit of pay­ing a mar­ginal or neg­li­gi­ble amount or not pay­ing any­thing at all is quite preva­lent.”

About 95 per cent of taxes in the first two months had come from only 400,000 as­sessees.

The FM also de­scribed the note ban — in Novem­ber last year — as a fun­da­men­tal re­form, nec­es­sary to make In­dia a more tax­com­pli­ant so­ci­ety. He added sys­tem­atic ef­forts to chal­lenge the “shadow econ­omy” were made only re­cently. “In the last few years, the bulk of the in­crease in tax pay­ers has not been in terms of num­ber of com­pa­nies but in­di­vid­u­als who are com­ing into the tax net.”


Fi­nance Min­is­ter Arun Jait­ley dur­ing the Har­vard Mahin­dra lec­ture at the Har­vard South Asia In­sti­tute in Bos­ton on Wed­nes­day

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