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GST rates on real estate slashed to boost key sector

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Mumbai: The Goods and Services Tax Council decided to cut the tax on under-construction houses to 1% for properties valued up to ?45 lakh and to 5% for those in the premium segment in order to boost the troubled real estate sector and provide relief to aspiring homebuyers.

The rates will be brought down from the existing 8% and 12%, respectively.

“In its 33rd meeting the GST Council has accorded big relief to the real estate sector. GST rate on affordable housing has been reduced to 1% from 8% and for others [premium segment] from 12% to 5% for both without input tax credit. This will give a boost to housing for all and fulfil the aspirations of the neo-middle classes,” said finance minister Arun Jaitley, who is also the chairman of the council.

 

“The new GST rates will be applicable from April 1,” Jaitley said after a meeting of the council that decides on matters related to indirect taxes and has representation of state finance ministers.

GST is levied on under-construction properties or ready-to-move-in houses where a completion certificate has not been issued at the time of sale. Sale of properties after a completion certificate is issued attracts stamp duty.

Jaitley said the council also expanded the definition of affordable houses for the purpose of GST, which is based on carpet area instead of the common practice of super area whereby builders often allegedly cheat gullible buyers.

Besides being up to ?45 lakh in value, a property must not exceed 60 square metres carpet area to be eligible for the 1% GST rate under the affordable segment in metro cities, including Mumbai Metropolitan Region and Delhi-NCR. This criterion will be relaxed to 90 square metres of carpet area for non-metros.

Under this criterion, one can now have a two-bedroom flat in a metro city and a three-bedroom flat in a non-metro, the minister said.

Consensus on GST rates and the definition of affordable housing in the council was reached after a marathon debate on various aspects that took more than two hours, an official present in the meeting said requesting anonymity.

West Bengal finance minister Amit Mitra had written a letter to the council on Thursday demanding 1% tax on affordable housing saying the proposed 3% GST on this segment would “actually increase the tax burden on the small home buyers”.

Last month, a group of ministers headed by Gujarat deputy chief minister Nitin Patel recommended cutting tax rates for under-construction residential properties in the premium segment to 5% and 3% in the affordable category.

Jaitley said the council deliberated on the possibility of builders committing tax evasion as they would not get input tax credit on building materials such as cement and steel. In order to prevent builders from reverting to cash purchases of inputs, the council will make it mandatory for them to buy a certain percentage of building materials from registered buyers, the minister said.

This percentage and other finer details will be worked out by the fitment and law committees, which will submit their drafts by March 10. Then the council will meet through video conference to decide on these matters, Jaitley said. A physical meeting of ministers is not possible during the period because most of them will be busy in the general elections.


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CBDT refutes social media rumours on ITR filing, says no change in IT return forms

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New Delhi: The Central Board of Direct Taxes (CBDT) has refuted rumours in social media regarding difficulties in filing return of income by taxpayers, stating that no change has been made in income-tax return (ITR) forms.

“No changes have been made in any of the Income-tax Return (ITR) forms including ITR-2 and ITR-3 since the notification made on April 1 2019, i.e. on the 1st day of the Assessment Year 2019-20,” CBDT said.

“It is reiterated that there are no changes in the notified ITR forms; only the utility has been updated to facilitate the taxpayers. Therefore, the assertion that numerous changes have been made in ITR-2 and ITR-3 on July 11, 2019, does not give a correct picture,” it added.

 

There were reports in social media that the taxpayers were facing difficulties in filing return of income in ITR-2 & ITR-3 due to large scale changes in the ITR form on July 11.

CBDT stated that the software utility for e-filing of all the ITR forms were released long back. The utility for e-filing ITR-2 and ITR-3 was released on May 2 and on May 10 respectively.

However, the software utility update is a dynamic process and is continuously taken up as per the feedback received from the users/filers to ease their experience in electronic filing of returns, it added.

CBDT further clarified that the updating of utility does not hamper filing of return as the taxpayers are allowed to file using the utility which is available at that point of time.

“For example, more than 85 lakh taxpayers have filed returns in ITR-1 till date by using the said utility, which has also undergone update later. Therefore, the impression that the taxpayers are not able to file return due to changes in ITR form is also not correct as more than 1.38 crore taxpayers have already filed their returns by using the utility released till date. Even though the utility is being updated regularly to provide ease to taxpayers, the returns filed by using the previous version of utility will continue to be valid,” it said.

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Lagarde resigns as IMF chief, starting race for her successor

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Washington: International Monetary Fund chief Christine Lagarde submitted her resignation from the global crisis lender, citing more clarity about her nomination to lead the European Central Bank as European legislators approved a new top bureaucrat.

Lagarde said in a statement her resignation was effective Sept 12, firing the starting gun for the IMF’s search for her successor, which is likely to be another European.

“With greater clarity now on the process for my nomination as ECB President and the time it will take, I have made this decision in the best interest of the Fund,” Lagarde said in a statement.

 

She said her resignation would expedite the selection for the next head of the IMF.

IMF succession is expected to be a major topic of discussion among G7 finance ministers and central bank governors meeting on Wednesday and Thursday in Chantilly, France, near Paris amid concerns that slowing global growth and trade conflicts will pressure vulnerable economies.

Lagarde’s resignation, first reported by Reuters, came two weeks after her nomination on July 2 for the ECB’s top job. She did not immediately quit the IMF because of uncertainty over whether the new European Parliament would support her and other new EU leadership positions, sources told Reuters.

Her nomination was part of a package of top officials agreed by EU governments that included German Defence Minister Ursula von der Leyen as European Commission president, who drew Green party opposition.

Later on Tuesday, von der Leyen was approved by the European Parliament in a 383-327 vote.

The European parliament will hold a nonbinding vote on Lagarde’s appointment, which is expected to be finalized by EU leaders at a regular summit on Oct 17-18.

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Centre to launch portal to help Jet Airways staff find jobs, in touch with SpiceJet and IndiGo

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Mumbai: The government may not have extended support to now-defunct Jet Airways, but it has promised to facilitate employment to job-less airline staff.

The Civil Aviation Ministry is in touch with other private airlines such as SpiceJet and IndiGo to assist Jet staff get meaningful employment.

Civil Aviation Minister Hardeep Singh Puri said that a website would be launched listing staff of Jet Airways and help find employment in other private entities.

 

“We are also producing a website which is ready. I wish I had the capacity of telling you that the website is up. Every employee would be listed there and the prospects for their re-employment or employment will be facilitated by the government,” Puri said while replying to Members in the Rajya Sabha on the Airports Economic Regulatory Authority of India (Amendment) Bill, 2019.

The Minister, however, said that government cannot assume responsibility for a business failure conducted by a private party.

Referring to Jet Airways, Puri said he was sensitive to (business) failure and willing to see what can be done within the governmental system to cushion that failure.

“But to suggest that a private sector entity goes belly up and the government has to take the responsibility I don`t think that is correct,” the Minister said.

Run out of cash, Jet Airways had suspended its entire operations on April 17. Subsequently, the government re-allocated its slots and foreign traffic rights to rival carriers. Lenders to the airline led by State Bank of India (SBI) have initiated bankruptcy proceedings against it after all attempts to rope in a buyer failed.

Before the airline suspended its operation, it had nearly 20,000 staff on its rolls. Several hundreds of them are learnt to have joined other carriers.

Replying to Members on the Airports Economic Regulatory Authority of India (Amendment) Bill, 2019, he also countered a comment that airfares had gone up.

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