TS NOT IN FAVOUR OF GST ON REALTY, FEARS REVENUE LOSS

Telangana state government is not in favour of bringing real estate under GST, a proposal put forth by Union finance minister Arun Jaitley recently. The state government fears further loss of revenue if this is done.

The next GST Council meeting, to be held in Guwahati on November 9 is to take up the issue of bringing real estate under GST.

At present, state governments collect stamp duty and registration fee, which vary from state to state and which remains one of the major sources of tax income for states.

Telangana state earns over `3,000 crore through stamp duty and registration fee every year. States will have to stop collecting this amount and share 50 per cent of the revenue with the Centre if the realty sector is brought under GST.

TS, which is already facing revenue crunch on account of GST, fears further losses if real estate is brought under GST and has decided to air its views in the GST Council meeting.

Under pressure from state governments, the Centre had excluded petroleum products, liquor and real estate from the ambit of GST.

Only under-construction flats/ houses have been included in the GST at 18 per cent.

Bringing the entire real estate sector under GST would mean including land component and registration of properties under a uniform GST rate.

In TS and AP the stamp duty is six per cent. It was last revised in undivided AP in 2013. At that time, it was brought down to a uniform six per cent from 7.5 per cent in urban areas and 8.5 per cent in rural areas.

The six per cent stamp duty at present consists of four per cent stamp duty, 1.5 per cent transfer duty, and 0.5 per cent registration fee.

State finance minister Etala Rajender has told revenue officials to prepare a report on the revenue loss the state government would suffer if real estate is brought under GST so that he can present the case in the Guwahati meeting on November 9.

“Many other states are opposing inclusion of real estate in GST without addressing the revenue loss concerns. Only real estate, petroleum products and liquor have been exempted from GST. All states are facing a revenue crunch due to GST from July 1 and if the balance three sectors are also brought under GST one by one, it would make states completely dependent on the Centre for funds, which is not good in a federal set-up,” he said.