The GST Council is slated to meet on January 10 to discuss lowering GST on under-construction flats and houses to 5 per cent, as well as hiking exemption threshold for small and medium enterprises.The council, in its previous meeting on December 22, 2018, had rationalised the 28 per cent tax slab and reduced rates on 23 goods and services.However, GST is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale.

An official said that this 12 per cent GST rate ideally would have been partially offset by way of taxes paid on inputs by builders and hence the actual incidence of GST on under-construction home buyers would have been around 5-6 per cent. However, builders are not passing on the input tax credit benefit to consumers.

This would be the 32nd meeting of the council, which is chaired by Finance Minister Arun Jaitley and comprises his state counterparts.Briefing reporters after the recent council meeting, Jaitley had said that the next meeting would consider rationalisation of tax rates on residential properties and raising the threshold limit for MSMEs from the current Rs 20 lakh.

The GST Council is likely to consider lowering GST on under-construction flats and houses to 5 per cent, an official said. Currently, the Goods and Services Tax is levied at 12 per cent 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.

“One of the proposals before the council is to lower the GST rate to 5 per cent for builders who purchase 80 per cent of inputs from registered dealers,” an official said. Currently, businesses with a turnover of up to Rs 20 lakh are exempted from GST. The Council could consider hiking the threshold to Rs 75 lakh for only MSMEs.

Besides, the council would consider composition scheme for small suppliers, since it felt that the number of small service providers getting registered under GST was not on expected lines.

“An in-principle unanimous decision was taken that a composition scheme be framed for small service providers. The threshold and composition charge would be decided in the next meeting,” Jaitley had said on December 22.