The Goods and Services Tax (GST) Council is expected to provide a clarification stating that the Real Estate Regulatory Authority (RERA) will not be subject to GST. RERA functions as both a regulator and facilitator for the realty sector and is covered under Article 243G of the Constitution, dealing with powers, authority, and responsibilities of panchayats. RERA was established in different states to promote transparency in real estate projects, protect the interests of consumers, and provide a mechanism for speedy dispute resolution. After discussions with RERA functionaries about their roles and responsibilities, it was decided that GST should not be applicable to them.
The funding for RERA comes from the respective state governments, so levying GST would essentially mean taxing the state governments. It is expected that this clarification will be announced during the next meeting of the GST Council, which is chaired by the Union Finance Minister and comprises state ministers. This meeting is expected to take place before the imposition of the Model Code of Conduct for the upcoming general elections in April-May. The exemption from GST for certain services offered by key regulatory bodies was lifted on July 18, 2022. This led to discussions regarding the tax implications for RERA bodies as well. Rajat Mohan, the Executive Director of Moore Singhi, emphasized that excluding RERA authorities from GST considerations could potentially reduce expenses for both developers and homebuyers. In the residential real estate sector specifically, Input Tax Credit (ITC) is not permissible, making this clarification from the GST Council highly beneficial for the sector. Stay tuned for further updates on this matter as it unfolds.
Conclusion
The GST Council is likely to provide clarity on tax exemptions for the Real Estate Regulatory Authority (RERA). RERA plays a vital role in regulating the real estate sector and ensuring transparency in projects. Exempting RERA from GST will help ease the financial burden on both developers and homebuyers. This announcement will bring much-needed clarity and boost confidence in the real estate industry.
