Revised Draft Model GST Law–Key Concerns from Real Estate Industry Standpoint

Abstract

Goods & Service Tax (GST) is a momentous reform for Indian economy by developing a common Indian market and reducing the cascading effect of tax on the cost of goods and services. It will impact the Tax Structure, Tax Incidence, Tax Computation, Tax Payment, Compliance, Credit Utilization and Reporting leading to a complete overhaul of the current indirect tax system. It is, therefore, important that the design of proposed GST law should be such that it promotes investments and growth and enable the real estate developer to pass on benefits to the end consumer. Recently, a revised version of the draft model Goods and Service Tax (GST) Act, Integrated GST Act has been released by the Government of India. In addition, Government of India has also released Goods and Service Tax (Compensation to the States for loss of revenue) Bill. It seems that the revised draft Model Goods and Service Tax (MGST) has taken into consideration numerous industry representation made to them and endeavored removing all the possible anomaly, which was initially created by the earlier Model GST law. Even though construction services has been taxable under VAT and service tax for a decade or so, the industry is still plagued with uncertainty on key basic issues that remains unsolved leading to intense litigation, especially on issues like GST rates, valuation, availability of input tax credit etc. In this article, key concerns faced by the real estate industry due to revised draft model GST law have been outlined.