'GST Council may soon clarify on exemption of tax to Rera(Real Estate Regulatory Authority) bodies'

The GST Council is likely to soon clarify that Real Estate Regulatory Authority (Rera) will not be required to pay Goods and Services Tax (GST), an official said.

According to the official, Rera, which functions as a regulator as well as facilitator for the realty sector, is covered under Article 243G of the Constitution dealing with powers, authority and responsibilities of panchayats.

Rera was set up in different states to ensure transparency in real estate projects, protect the interest of consumers and to establish an adjudicating mechanism for speedy dispute redressal.

The official said that after discussions with Rera functionaries about the nature of their function it was decided that GST is not applicable on them.

The official further said that Reras are funded by respective state governments and hence levying GST would mean taxing state governments.

A meeting of GST Council, chaired by Union Finance Minister and comprising state ministers, is likely to be held before the imposition of Model Code of Conduct for the general election due in April-May.

 

The last meeting of GST Council was held on October 7, 2023.

Moore Singhi Executive Director Rajat Mohan said before July 18, 2022, certain services offered by key regulatory bodies in India, including the Reserve Bank, Securities Exchange Board of India (Sebi), Insurance Regulatory and Development Authority (IRDA), Food Safety and Standards Authority of India (FSSAI), and the Goods and Services Tax (GST) network, were not subject to GST.

This exemption was lifted on July 18, 2022, leading to discussions about the tax implications for Rera bodies as well.

"Furthermore, in the residential real estate sector, Input Tax Credit (ITC) is not permissible, which means excluding Rera authorities from GST considerations could potentially reduce expenses for both developers and homebuyers. Consequently, a clarification from GST Council on this matter would be significantly beneficial for the sector," Mohan added.

Source::: BUSINESS STANDARD,  dated 26/02/2024.