The GST Council Wednesday deferred a decision on rationalisation of tax rates on real estate and lottery till February 24 as some non-BJP states demanded that a meeting, where members are physically present, be convened for deciding on such crucial issues.
The 33rd meeting of the Council, held through video conferencing, also decided to extend the deadline for filing summary sales return - GSTR-3B - for January by two days till February 22.
"Considering the speed at which returns are getting filed, thousands of returns being filed every hour, the suggestion before the GST Council was to extend the deadline by two days for all states; and since some areas are facing disturbance, for Jammu & Kashmir it be extended till February 28. So we took that decision," Finance Minister Arun Jaitley said.
The GST Council, headed by Jaitley and comprising state counterparts, was also slated to discuss the reports of the group of ministers (GoM) on under-construction housing property and lottery. Ministers from all states attended the meeting.
Briefing reporters after the meeting of the Council, Jaitley said the report of the GoM on real estate was considered, and since some states wanted a physical meeting before a final decision is taken on the issue, hence, a final decision would be taken after a physical meeting on February 24.
However, GST on lottery was not be taken up for discussion by the Council on Wednesday.
"The discussion which remained incomplete today through video conferencing... Few ministers expressed their opinion and the rest will express their opinion and we will try and take a decision on this issue on Sunday. So the meeting stands adjourned as of day for Sunday," Jaitley said.
During the meeting, opposition-ruled states like Delhi and Kerala demanded that a physical meeting be held to decide on crucial issues like real estate and lottery, while the representative from Punjab flagged a technical point relating to land cost being included while deciding on GST rate.
"I have always followed an approach of moving as per consensus, and since some of the states wanted a meeting where members are physically present, keeping the idea of consensus in mind, I adjourned the meeting to Sunday so that a physical meeting can be held and the same issue will be discussed on Sunday," Jaitley said.
Kerala Finance Minister Thomas Isaac in a tweet later said substantial issues on which there are differences of opinion should not be decided through video conferences. "This was the consensus reached in the first Council meeting. Therefore today's VC was an unfortunate aberration. Finally good sense prevailed".
The GoM on real estate sector, headed by Gujarat Deputy Chief Minister Nitin Patel, had earlier this month suggested cutting GST on under-construction residential properties to 5 per cent without input tax credit (ITC), from 12 per cent, currently. On affordable housing segment, it suggested that GST be slashed to 3 per cent, from 8 per cent.
At present, GST is levied at 12 per cent with ITC on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.
During the Council meeting on Wednesday, the representative from Bihar suggested that GST on affordable housing segment be brought down to 1 per cent. It also suggested that where 90 per cent area of a property is used for residential purposes and 10 per cent is used for commercial purpose, it should be treated as residential property for GST purposes.
Isaac said the GoM on lottery in its meeting on Monday went ahead deciding on GST rate despite the request for postponement of the meeting by him and Punjab Finance Minister Manpreet Singh Badal.
"What national calamity is going to befall if changes in lottery tax regime is postponed for more deliberations," Isaac questioned.
The GoM on lottery, under Maharashtra Finance Minister Sudhir Mungantiwar, favoured a uniform GST rate of either 18 per cent or 28 per cent.
Currently, a state-organised lottery attracts 12 per cent GST while a state-authorised lottery attracts 28 per cent tax.
The GoM favoured hiking GST rate on the state-organised lottery to either 18 per cent or 28 per cent and lowering rate on state-authorised lottery to 18 per cent or retaining it at 28 per cent.
On Tuesday, Isaac had strongly objected to the suggestion of the GoM saying this would benefit "lottery mafia" and that a decision should be taken only during a physical meeting.
"I will walk out of the February 20 Council meeting if any decision is taken on lottery. Also I will henceforth not attend any Council meetings till the elections are over. This is not cooperative federalism," Isaac had said.
Delhi Deputy Chief Minister Manish Sisodia had also written to Jaitley on Tuesday, seeking that a meeting be held where all members are physically present.
The two GoMs were set up by the GST Council last month.
PwC India Partner and Leader Indirect Tax Pratik Jain said restricting the input credit is not a good idea for any sector, particularly real estate which requires more formalisation.
"If at all the final decision is to introduce a 5 per cent levy without input credit, it is important that other related issues such as reduction in GST rate on cement and on construction contracts are also deliberated in detail, along with aspects such as treatment of input credit which may already be accumulated in the books," Jain said.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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