New Delhi: In reaction to the real estate slump, the government has announced the formation of a Group of Ministers (GoM) to assess problems faced by the sector following the implementation of the Goods and Services Tax (GST), a move aimed at garnering support for the Modi government in the face of a tough General Election this summer. The seven-member committee, which will be led by Gujarat deputy chief minister Nitin Patel, will also comprise the finance ministers of Maharashtra, Punjab, Karnataka, Uttar Pradesh, Goa and Kerala.
The GST council had considered lowering its GST to 5 percent on payments made for under-construction houses or flats that are ready to be occupied, where completion certificate has not been issued at the time of sale. At present, GST is levied at an effective rate of 12 percent on premium housing and effective rate of 8 percent on affordable housing for such payments.
"A seven-member Group of Ministers shall be constituted to examine the proposal of giving a composition scheme to boost the residential segment of the real estate sector," the GST council said in a press release.
The committee will recommend ways to address problems faced by both developers and buyers. The panel will also assess different aspects of levying GST on the transfer of development rights in a joint development agreement and suitable model.