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Business News/ Opinion / Quick Edit/  The GST muddle
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The GST muddle

Allowing a choice of GST rates on under-construction real estate projects has added fresh complexity to GST's already complicated structure

 (Reuters)Premium
(Reuters)

The GST Council’s decision to allow a choice of tax rates for under-construction real estate projects has added fresh complexity to the goods and services tax’s already-complicated structure. Home builders can now pay tax either at 12% with the benefit of input tax credits, or at 5% without any input claims. Till recently, the first of the two options was what their liability was. But then the GST Council revised it to the latter. While allowing them to pick either of the options comes as a relief for builders, who had accumulated input credits but stood to lose them, it revealed poor planning.

The back-and-forth also illustrates why GST has evoked such anxiety across sectors. It is a far cry from what was originally envisaged: a simple common tax on all goods and services. There are as many as five different rates. Then there are a variety of riders on input benefits. Businesses within the same sector, such as restaurants, have differing taxes to pay. All of this has turned a key canon of taxation, simplicity, on its head. Granted, any new system of levies needs adjustments, but the frequency of tweaks has left far too many taxpayers confused. Is tax stability too much to ask for? 

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Published: 20 Mar 2019, 07:35 AM IST
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