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GST Council to
take up real estate in November meeting: Arun Jaitley
Aadhaar could be
made mandatory for buying international air tickets, cars.
Real estate, a
sector prone to tax evasion, might soon come under the goods and services
tax (GST) net.
The GST Council
would consider this at its next meeting on November 10 in Guwahati, finance
minister Arun Jaitley said on Wednesday — early Thursday morning in
India — at Harvard University.
While delivering a
lecture on tax reforms in the country, he called the taxation system in India
one of the least efficient in the world, with a very small tax base. He also
hinted at making Aadhaar mandatory for buying a car or international
air tickets in the future, taking a cue from the recent Supreme Court
judgement.
The GST was
rolled out on July 1, replacing a large number of indirect taxes with one
unified tax of five rates. Petroleum, real estate, and alcohol were kept out of
its ambit.
“The one sector in
India where maximum amount of tax evasion and cash generation takes place and which
is still outside the GST is real estate. Some of the states
have been pressing for it. I believe that there is a strong case to bring real
estate into the GST,” Jaitley said.
The stamp duty,
which is outside the GST, has complicated the tax structure for real
estate.A lot of states had opposed the inclusion of the stamp duty in the GST, as
it was a source of revenue for them.
“Some states want;
some do not. There are two views. Therefore, by discussion, we would try to
reach one view,” he said.
A 12 per cent GST is levied on construction of a complex, building, or
civil structure intended for sale, wholly or partly. However, land and other
immovable property have been exempted from the GST. If real
estate is brought under the GST, the final tax would be almost negligible,
Jaitley added.
The FM is on a
week-long visit to the US, where he will attend the annual meetings of the
International Monetary Fund and the World Bank. Earlier, Jaitley had said
bringing real estate under the GST was easier than
petroleum.
Jaitley said there
would have to be some link between lifestyle and expenditure, and taxes paid,
in the future. “Unquestionably and historically we have had one of the least
efficient... tax systems [of] any country in the world.”
The FM also spoke
of making Aadhaar mandatory for buying cars or international air tickets.
According to one judicial opinion, this might be treated as an exception to the
law of privacy, keeping the revenue interests of the state in mind.
“You have 12-15
million cars being bought every year. You have 20 million people travelling
overseas every year. And, if you compare it with the spending data, the base
itself is extremely narrow,” he said.
Jaitley also spoke
on revenue collection under the GST and demonetisation.
He said in the
first month since the GST roll-out, only 5.5 million people had filed
returns and 40 per cent assessees had paid no tax. “So even now... the habit of
paying a marginal or negligible amount or not paying anything at all is quite
prevalent.”
About 95 per cent
of taxes in the first two months had come from only 400,000 assessees.
The FM also
described the note ban — in November last year — as a fundamental
reform, necessary to make India a more tax-compliant society.
He added 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.”
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