GST Council meeting: Simplified registration, dispute reforms may provide relief to real estate developers

57th GST Council meeting: For real estate developers expanding across multiple states, the proposed GST registration reforms may make approvals easier

The 57th Goods and Services Tax (GST) Council’s approval of a series of process reforms, including simplified registration, could provide some relief to real estate developers, particularly those expanding across multiple states or seeking project wise GST registration, experts said.The Council on October 8 approved several measures aimed at overhauling GST administration, including simplified registration procedures, system-driven approvals for most amendments to registration particulars. It also proposed changes to dispute resolution, including streamlining the process of issuing demand notices, adjudication orders and appeal orders covering the issues like quality of notices/ orders, timely issuance, proper justification of grounds for alleging fraud or suppression of facts, adherence to natural justice principle, reduction in penalties in non-fraud cases, said experts.For the real estate sector, where large developers are increasingly expanding beyond their home markets, the proposed registration reforms could reduce administrative friction. A Bengaluru-based developer taking up projects in Delhi-NCR, for instance, or a Mumbai-based developer expanding into other cities, generally has to deal with GST registrations and compliance requirements across multiple states.“For builders operating in multiple states, the proposed registration reforms are a welcome step towards reducing administrative friction. Clear documentation requirements, auto-approval of most amendments and system-driven cancellation mechanisms will reduce uncertainty for taxpayers and limit unnecessary interactions with tax authorities. These measures should particularly benefit businesses looking to expand rapidly across multiple states,” said Harpreet Singh, partner, indirect tax, Deloitte.

Proposed GST Council reforms may ease real estate disputes

The 57th Goods and Services Tax (GST) Council’s approval of a series of process reforms, including simplified registration, could provide some relief to real estate developers, particularly those expanding across multiple states (iStockphoto)  (MINT_PRINT)

The proposed reforms related to the dispute resolution could also be significant for a sector that has been dealing with GST disputes particularly in areas such as joint development agreements (JDAs), transfer of development rights (TDR), taxability in case of plotted projects and input tax credit (ITC), said GST experts.

“The real-estate sector is used to grappling with various GST disputes. The Council's emphasis on standardised adjudication practices and natural justice is encouraging. Clearer guidance for notices and orders, combined with a threshold for low-value disputes and rationalised penalties, should help reduce avoidable litigation and improve the overall quality and consistency of tax administration,” Singh said. For developers, the significance of the 57th GST Council meeting may lie less in a change in the GST rate on property or clarity over the interpretational issues but more in improving consistency in tax administration and potentially easing litigation, added Singh.Saurabh Agarwal, Tax Partner, EY India, said that the GST Council has also recommended an alternate mechanism for ITC availment with the intent that genuine taxpayers do not lose ITC if a supplier does not deposit taxes.

The Council has recommended complete withdrawal of arrest powers under GST. General default penalties have also been reduced from ₹25,000 to ₹10,000 providing further relief.