GST Council Mulls Clarification on RERA's Tax Obligations
According to a reliable source, the Goods and Services Tax (GST) Council is contemplating issuing a clarification soon, stating that the Real Estate Regulatory Authority (RERA) should not be subject to GST levies. The rationale behind this consideration stems from the argument that RERA's function as a facilitator and regulatory body within the real estate domain aligns with the provisions outlined in Article 243G of the Constitution, which pertains to the powers and responsibilities of panchayats.
RERA's Role and GST Implications
Various states have established RERA to ensure consumer protection, enhance transparency in real estate ventures, and expedite dispute resolution processes. Discussions surrounding the nature of RERA employees' roles have brought to light the potential for GST exemptions for them, as per an official statement. The argument posits that since state governments provide funding to RERAs, imposing GST would essentially amount to taxing these very governments.
Upcoming GST Council Meeting
Following a forthcoming meeting of the GST Council, presided over by the Union Finance Minister and attended by state ministers, the Model Code of Conduct for the general election slated for April-May is anticipated to be enforced. The GST Council's most recent assembly took place on October 7, 2023.
Historical Context of GST Exemptions
An expert elucidates that leading Indian regulatory organizations, including the Reserve Bank, the Securities Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDA), the Food Safety and Standards Authority of India (SSAI), and the Goods and Services Tax (GST) network, enjoyed GST exemptions for specific services prior to July 18, 2022. The removal of this exemption on said date ignited discourse regarding the tax implications for RERA bodies.
As the specialist explains, “In addition, the Input Tax Credit (ITC) is not applicable in the residential real estate industry. It implies that eliminating RERA authorities from the GST calculation may result in lower costs for developers and purchasers of real estate. So industry would greatly benefit from an explanation from the GST Council on this issue.”