Finance minister asks banks to meet realtors to understand industry issues

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NEW DELHI: Finance Minister Piyush Goyal has asked banks to meet real estate sector representatives within the next fortnight to discuss the issues being faced by them.

The minister also assured that goods and services tax (GST) rates would be brought down soon for the sector, which has been facing a demand slack.

“There is a real problem (being faced by the realty sector),” Goyal said at a Credai event here, adding that banks should take some initiatives to assess the projects and fast track them.

He suggested that within the next 7-15 days the Indian Banks’ Association (IBA) has a meeting with the real estate players to help increase funding to the sector.

He said the group of ministers (GoM) under GST Council has worked out a mechanism for taxing real estate sector under GST.

“I hope you will like the final consensus of the GoM. In the next meeting of the GST Council soon, it would be discussed,” Goyal said.

A state ministerial panel last week favoured lowering GST on under-construction residential properties to 5 per cent, from 12 per cent currently.

It also favoured slashing GST on affordable housing from 8 per cent to 3 per cent.

Currently, GST is levied at 12 per cent with input tax credit (ITC) 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.

The effective pre-GST tax incidence on such housing property was 15-18 per cent.

GST, however, is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale.

There have been complaints that builders are not passing on the ITC benefit to consumers by way of reduction in price of the property after the rollout of GST, following which the GST Council had set up a ministerial panel to suggest ways to boost realty sector.

Source: Press Trust of India