Momentum builds up for inclusion of real estate in GST

NEWDELHI: Momentum is building for inclusion of real estate within the ambit of the goods and services tax (GST) with several states backing finance minister Arun Jaitley’s suggestion that the new indirect tax system was the answer to tax evasion and flow of unaccounted wealth in the sector.

The states of Delhi, Jammu and Kashmir and Bihar have signalled their support for Jaitley’s suggestion, in the run-up to the GST Council meeting on November 9 in Guwahati, which is likely to look into the issue.

Jaitley said in a lecture at Harvard University last Wednesday that real estate was a sector where “maximum amount of tax evasion and cash generation takes place and which is still outside the GST”. The minister said some states have been pressing for real estate’s inclusion in GST and that the GST Council will discuss it at its next meeting, PTI reported from Washington.

Bihar chief minister Nitish Kumar supported the proposal on Monday, saying the state always supported real estate’s inclusion in GST and other measures that targeted black money holders. “In fact, Bihar was among the first states to have raised such a demand,” PTI reported from Patna, quoting Kumar.

Jammu and Kashmir has set up an internal panel to examine the inclusion of land, petrol, electricity and liquor within state GST (SGST), on which a decision is expected in the state’s annual budget in January, Mint reported on Tuesday. Delhi deputy chief minister Manish Sisodia too wrote to Jaitley, urging that the real estate sector be brought under the ambit of GST.

Implementation of the proposal, however, would need an amendment to the Constitution, experts said. At present, taxation of land and buildings is part of the state list in schedule seven of the Constitution. Allowing the central government taxation rights on the land and buildings would need an amendment to the Constitution.