JOIN USGST rates likely to be over 12 pc
The task force had recommended an overall GST rate of 12 per cent “but it is likely to be higher than that,” Revenue Secretary Sunil Mitra said on the sidelines of a CII seminar here.
He however clarified that he is not talking about the Central GST but the combined tax at the Union and state governments’ level. The task force had recommended five per cent GST rate at the Central level and seven per cent at the state level. GST was earlier scheduled to be implemented from April 1, 2010, but now the Centre and states are trying to introduce it by 2011-12.
Realty sector
Meanwhile, Mitra also ruled out rolling back of service tax on real estate developers at the time of construction, a move which the industry says will jack up housing and commercial property prices.
“Construction is a service. As a service, there is no reason why it should not be taxed,” he said, adding however, it is only three per cent or 3.5 per cent that gets added up for the buyer.
Central Board of Excise and Customs Chairman V Sridhar has also said the realty sector would not attract 10 per cent service tax in effect. “The tax is not at full 10 per cent ad valorem. We’ve a scheme of abatement for 67 per cent. The ratio, basically, was arrived at to represent the cost of inputs. So, in reality, it would pay only 33.3 per cent of the value,” Sridhar said.
In the Budget speech, Finance Minister Pranab Mukherjee had said development of real estate complexes will attract service tax, unless the entire consideration for the property is paid after completion of construction.
“In the construction of complex services’, it is being provided that unless the entire consideration for the property is paid after the completion of construction (i.e. after receipt of completion certificate from the competent authority), the activity of construction would be deemed to be a taxable service,” say the Budget papers.