Updated February 25th, 2024 at 14:22 IST

GST Council to soon provide clarity on tax exemption for RERA

Following discussions with RERA officials regarding their regulatory role, it was determined that GST does not apply to them.

Reported by: Business Desk
Real estate | Image:Pexels
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GST Council on RERA: The GST Council is expected to provide clarity soon regarding the tax exemption for Real Estate Regulatory Authorities (RERAs), as per an official statement. RERAs, established to ensure transparency and consumer protection in the real estate sector, are governed by Article 243G of the Constitution, pertaining to the powers and responsibilities of panchayats.

Following discussions with RERA officials regarding their regulatory role, it was determined that GST does not apply to them. Given that RERAs are funded by state governments, imposing GST would essentially entail taxing these governments.

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A meeting of the GST Council, chaired by the Union Finance Minister and including state ministers, is anticipated before the implementation of the Model Code of Conduct for the upcoming general election scheduled for April-May. The last GST Council meeting took place on October 7, 2023.

Rajat Mohan, Executive Director at Moore Singhi, highlighted that prior to July 18, 2022, key regulatory bodies in India, such as the Reserve Bank, SEBI, IRDA, FSSAI, and the GST network, were exempt from GST. However, this exemption was revoked on July 18, 2022, sparking discussions regarding the tax implications for RERA bodies.

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Furthermore, Mohan noted that in the residential real estate sector, Input Tax Credit (ITC) is not permissible. Therefore, excluding RERA authorities from GST considerations could potentially reduce expenses for both developers and homebuyers. Consequently, a clarification from the GST Council on this matter would be immensely beneficial for the sector.

(With PTI inputs)

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Published February 25th, 2024 at 14:22 IST