Daily Archive: March 19, 2019

Ministry of Finance:. Decisions taken by the GST Council in the 34thmeeting held on 19thMarch, 2019 regarding GST rate on real estate sector

GST Council in the 34th meeting held on 19th March, 2019 at New Delhi discussed the operational details for implementation of the recommendations made by the council in its 33rd meeting for lower effective GST rate of 1% in case of affordable houses and 5% on construction of houses other than affordable house. The council decided the modalities of the transition as follows.

Option in respect of ongoing projects:

2. The promoters shall be given a one -time option to continue to pay tax at the old rates (effective rate of 8% or 12% with ITC) on ongoing projects (buildings where construction and actual booking have both started before 01.04.2019) which have not been completed by 31.03.2019.

3. The option shall be exercised once within a prescribed time frame and where the option is not exercised within the prescribed time limit, new rates shall apply.

New tax rates:

4. The new tax rates which shall be applicable to new projects or ongoing projects which have exercised the above option to pay tax in the new regime are as follows.

(i) New rate of 1% without input tax credit (ITC) on construction of affordable houses shall be available for,

(a) all houses which meet the definition of affordable houses as decided by GSTC (area 60 sqm in non- metros / 90 sqm in metros and value upto RS. 45 lakhs), and

(b) affordable houses being constructed in ongoing projects under the existing central and state housing schemes presently eligible for concessional rate of 8% GST (after 1/3rd land abatement).

(ii) New rate of 5% without input tax creditshall be applicable on construction of,-

all houses other than affordable houses in ongoing projects whether booked prior to or after 01.04.2019. In case of houses booked prior to 01.04.2019, new rate shall be available on instalments payable on or after 01.04.2019.
all houses other than affordable houses in new projects.
commercial apartments such as shops, offices etc. in a residential real estate project (RREP) in which the carpet area of commercial apartments is not more than 15% of total carpet area of all apartments.
Conditions for the new tax rates:

5. The new tax rates of 1% (on construction of affordable) and 5% (on other than affordable houses) shall be available subject to following conditions,-

Input tax credit shall not be available,
80% of inputs and input services (other than capital goods, TDR/ JDA, FSI, long term lease (premiums)) shall be purchased from registered persons. On shortfall of purchases from 80%, tax shall be paid by the builder @ 18% on RCM basis. However, Tax on cement purchased from unregistered person shall be paid @ 28% under RCM, and on capital goods under RCM at applicable rates.
Transition for ongoing projects opting for the new tax rate:

6.1 Ongoing projects (buildings where construction and booking both had started before 01.04.2019) and have not been completed by 31.03.2019 opting for new tax rates shall transition the ITC as per the prescribed method.

6.2 The transition formula approved by the GST Council, for residential projects (refer to para 4(ii)) extrapolates ITC taken for percentage completion of construction as on 01.04.2019 to arrive at ITC for the entire project. Then based on percentage booking of flats and percentage invoicing, ITC eligibility is determined. Thus, transition would thus be on pro-rata basis based on a simple formula such that credit in proportion to booking of the flat and invoicing done for the booked flat is available subject to a few safeguards.

6.3 For a mixed project transition shall also allow ITC on pro-rata basis in proportion to carpet area of the commercial portion in the ongoing projects (on which tax will be payable @ 12% with ITC even after 1.4.2019) to the total carpet area of the project.

Treatment of TDR/ FSI and Long term lease for projects commencing after 01.04.2019

7. The following treatment shall apply to TDR/ FSI and Long term lease for projects commencing after 01.04.2019.

7.1 Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer shall be exempted subject to the condition that the constructed flats are sold before issuance of completion certificate and tax is paid on them. Exemption of TDR, FSI, long term lease (premium) shall be withdrawn in case of flats sold after issue of completion certificate, but such withdrawal shall be limited to 1% of value in case of affordable houses and 5% of value in case of other than affordable houses. This will achieve a fair degree of taxation parity between under construction and ready to move property.

7.2 The liability to pay tax on TDR, FSI, long term lease (premium) shall be shifted from land owner to builder underthe reverse charge mechanism (RCM).

7.3 The date on which builder shall be liable to pay tax on TDR, FSI, long term lease (premium) of land under RCM in respect of flats sold after completion certificate is being shifted to date of issue of completion certificate.

7.4 The liability of builder to pay tax on construction of houses given to land owner in a JDA is also being shifted to the date of completion. Decisions from para 7.1 to 7.4 are expected to address the problem of cash flow in the sector.

Amendment to ITC rules:

8. ITC rules shall be amended to bring greater clarity on monthly and final determination of ITC and reversal thereof in real estate projects. The change would clearly provide procedure for availing input tax credit in relation to commercial units as such units would continue to be eligible for input tax credit in a mixed project.

9. The decisions of the GST Council have been presented in this note in simple language for easy understanding. The same would be given effect to through Gazette notifications/ circulars which alone shall have force of law.

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Steel Ministry organizes Vigilance Conclave

Ministry of Steel organized a two-day Vigilance Conclave in New Delhi which concluded today. The Conclave was aimed at sensitizing the officials of Steel PSUs on the basic principles and procedures to be followed while taking important administrative and commercial decisions relating to various functions including procurements, contracts, personnel and finance.

Inaugurating the conclave yesterday, Central Vigilance Commissioner Shri K.V. Chowdary said transparency and accountability are the cardinal principles of decision making. He stressed upon having a strong internal whistle blower mechanism in every organization. The CVC also emphasized that there are enough in-built safeguards in the law to protect honest and upright officers.

Secretary Steel Shri Binoy Kumar, said that at times, lack of knowledge and awareness of good practices result in flouting of rules and procedures, which can be avoided. He impressed upon the participants to understand the nuances of vigilance administration to facilitate their working.

Joint Secretary and CVO of the Ministry of Steel Ms.Ruchika Chaudhary Govil said vigilance is integral to management of any organization. She said the aim of organizing the conclave is to help reduce opacity, delays and discretions, which often result in matters being embroiled in vigilance.

In the 2-day conclave, basic issues concerning vigilance, adherence to rules and regulations relating to public procurements, transparency in tendering processes, e-procurement, GeM, GFR, e-auction, ethics in governance, complaint handling system and other matters of importance were deliberated upon.

Chairman SAIL Shri Anil Kumar Chaudhary, CMD MECON Shri Atul Bhatt and CMD RINL, Shri A K Rath were also present in the inaugural function.

Around 100 senior officials of the PSUs of the Ministry of Steel, namely SAIL, RINL, NMDC, MECON, KIOCL, MOIL, MSTC, FSNL, Bird Group of Companies and OMDC participated in the conclave.

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Ministry of Corporate Affairs: IBBI, SEBI sign MoU for better implementation of IBC

The Insolvency and Bankruptcy Board of India (IBBI) signed a Memorandum of Understanding (MoU) today with the Securities and Exchange Board of India (SEBI).

The IBBI and the SEBI seek effective implementation of the Insolvency and Bankruptcy Code, 2016 (Code) and its allied rules and regulations, which have redefined the debt-equity relationship and aims to promote entrepreneurship and debt market. They have agreed under the MoU to assist and co-operate with each other for the effective implementation of the Code, subject to limitations imposed by the applicable laws.

The MoU provides for:

(a) sharing of information between the two parties, subject to the limitations imposed by the applicable laws;

(b) sharing of resources available with each other to the extent feasible and legally permissible;

(c) periodic meetings to discuss matters of mutual interest, including regulatory requirements that impact each party’s responsibilities, enforcement cases, research and data analysis, information technology and data sharing, or any other matter that the parties believe would be of interest to each other in fulfilling their respective statutory obligations;

(d) cross-training of staff in order to enhance each party’s understanding of the other’s mission for effective utilisation of collective resources;

(e) capacity building of insolvency professionals and financial creditors;

(f) joint efforts towards enhancing the level of awareness among financial creditors about the importance and necessity of swift insolvency resolution process of various types of borrowers in distress under the provisions of the Code, etc.

The MoU was signed by Shri Anand Baiwar, Executive Director, SEBI, and Shri Ritesh Kavdia, Executive Director, IBBI, at Mumbai.

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Ministry of Health and Family Welfare Health Ministry reviews the preparedness on West Nile Fever.

The Ministry of Health & Family Welfare with the officials from National Centre for Disease Control (NCDC) reviewed the current situation, state preparedness and action taken to deal with West Nile Fever (WNF) in Mallapuram district, Kerala, today. MOHFW deputed a multi-disciplinary public health team to Mallapuram District to investigate various epidemiological aspects of West Nile Virus in the district and State.

The State has been advised to follow the National Vector Borne Disease Control Program (NVBDCP) guidelines of personal protective measures to prevent mosquito bites. This guideline is available at NVBDCP website (nvbdcp.gov.in or nvbdcp.gov.in/WriteReadData/l892s/JE-AES-Prevention-Control(NPPCJA).pdf). The Ministry has also recommended vector surveillance and control to be carried out in coordination with NVBDCP. All cases of JE/AES are to be investigated as per guidelines of JE/ AES and also tested for West Nile Virus. Further, the community is to be sensitized through IEC campaigns on use of personal protective measures to prevent mosquito bites as per NVBDCP Guidelines.

West Nile Fever is a mosquito borne zoonotic disease caused by a flavivirus -West Nile Virus (WNV). This virus is related to viruses that cause Japanese Encephalitis, yellow fever and St. Louis encephalitis. Human infection is most often due to bites from infected mosquitoes. To date, no human-to-human transmission of WNV through casual contact has been documented. Infection with WNV is either asymptomatic (no symptoms) in around 80% of infected people, or can lead to West Nile fever or severe West Nile disease.

Testing for West Nile Virus is available at the National Institute of Virology, Pune and National Institute of Virology, Allapuzha. Facility for xeno-diagnosis with respect to infection among vectors is available at VCRC, Kottayam. NCDC branch in Kozhikode, in coordination with VCRC, Kottayam, will provide assistance for vector surveillance and xeno-diagnosis in the vector as well as prepare and disseminate a standardised hospital management protocol of AES case management to be followed by all hospitals catering to cases of AES.

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