Real Estate May Come Under GST, to Be Discussed in Nov: Jaitley

The Finance Minister identified real estate as the one sector where maximum amount of tax evasion takes place.

Finance Minister Arun Jaitley delivers the Harvard Mahindra lecture at the Harvard South Asia Institute in Boston on Wednesday, 11 October. (Photo: PTI)

Identifying real estate as the one sector where maximum amount of tax evasion takes place, Finance Minister Arun Jaitley said there was a strong case to bring it under the ambit of the GST.

The matter will be discussed in the next meeting of the GST, which will be held on November 9 in Guwahati, Jaitley said, while delivering a lecture at Harvard University on Wednesday, 11 October.

In the next meeting itself, we are addressing one of the problem areas or at least (having) discussion (on) it. Some states want, some do not. There are two views. Therefore, by discussion, we would try to reach one view.

Arun Jaitley, Finance Minister

Also Read: Jaitley at Harvard: Useful For BJP to Be Centrist on Social Issues

The Finance Minister said the move would benefit consumers who will only have to pay one "final tax" on the whole product.

"As a result, the final tax paid on the whole product in the GST would almost be negligible," he said.

Jaitley said the reduction in eventual expenditure, coupled with incentivising people to enter the tax net, may also help reduce the size of the "shadow economy".

A 12 per cent GST is levied on construction of a complex, building, or civil structure intended for sale to a buyer, wholly or partly. However, land and other immovable property have been exempted from the GST.

On demonetisation, Jaitley said it was a "fundamental reform" which was necessary to transform India into a more tax-compliant society.

“If you see the long-term impact of it, demonetisation brought in more digitised transactions; it brought the issue to the centre stage. It expanded the individual tax base. It compressed the cash currency by three percent which was operating in the market,” Jaitley said.

"Those objectives are for the long-term. No doubt there are short-term challenges, but (necessary) for transforming India from a non-compliant to a more compliant society," he said.

The Finance Minister said India had historically been one of the least efficient tax system in the world with an extremely small tax base.

"Frankly, over the last several decades, serious efforts, real efforts to expand this base had not been made. You had marginal efforts," he said, adding that systematic efforts to challenge the "shadow economy" were made only recently.

"In the last few years, the bulk of the increase in tax payers has not been in terms of number of companies but individuals who are coming into the tax net," he said.

Jaitley said some people had "misunderstood" the objective of demonetisation "which wasn't to confiscate somebody's currency.”

"Obviously, if somebody has currency and deposits in the bank, it does not become lawful holding. They still have to account for it. Therefore, the anonymity which was attached to a cash currency came to an end and that holding got identified," he said.

"The government was able to trace out about 1.8 million people whose deposits are disproportionate to their normal incomes. And they are all to answerable to the law and pay their taxes," he said.

Jaitley is on a week-long stay in the US, during which he will participate in annual meetings of the IMF and the World Bank.

Also Read: Note Ban, GST Tough Laws With Durable Benefits: Jaitley at Harvard

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