Call to bring real estate under GST
The Hindu Business Line
By KR SRIVATS
New Delhi, January 31:
After inflicting the pain of demonetisation aimed at combating black money and corruption, among others, it is now time to shower relief on people.
To this end, the Survey has suggested a five-pronged strategy that could act as ‘carrots’ (complements) to counter the potentially powerful ‘demonetisation stick’.
The most significant suggestion is that the Survey has made a case for inclusion of land and other immovable poverty within the scope of the proposed Goods and Services (GST). The current proposed GST regime does not cover real estate.
Land and immovable property are seen as a big source of black money creation. A GST with broad coverage to include activities that are sources of black money creation — land and other immovable property — should be implemented, the Survey suggested.
The Survey noted that demonetisation could have particularly profound impact on the real estate sector.
In the past, much of the black money accumulated was ultimately used to evade taxes on property sales.
To the extent that black money is reduced and financial transactions increasingly take place through electronic means, this type of tax evasion will diminish.
The Survey also highlighted that the weighted average price of real estate in eight major cities, which was already on a declining trend, fell further after November 8 last year.
Income and corporate tax
As part of the strategy, the Survey has called for reduction in the individual income tax rates and also reduction in real estate stamp duties. Also, the timetable for reducing the corporate tax rate could be accelerated.
The Survey also said that the income tax net could be widened gradually and, consistent with constitutional arrangements, could progressively encompass all high incomes (After all, black money does not make fine sectoral distinctions).
It also suggested that tax administration could be improved to reduce discretion and improve accountability.