The recent GST Council meeting decisions were presided over by Finance Minister Nirmala Sitharaman and attended by key officials from the Finance Ministry and Finance Ministers from different states. They have made big changes in the tax structure in the New Delhi meeting dated September 9, 2024.
One of the important decisions taken in the GST Council meeting was the imposition of the Reverse Charge Mechanism on the renting of commercial properties by unregistered persons. This is to plug revenue leakage and ensure better compliance by shifting the responsibility of paying GST from the landlord to the tenant.
Revenue Secretary Sanjay Malhotra announced another key decision of the GST Council meeting and clarified PLC. “It was decided that the PLC should be construed as a part of the consideration for the main construction service. Consequently, the entire value attracts the same GST rates for residential. Also, the commercial at the rate of 5% and 12%, respectively.
GST Council meeting ensures more effective tax collection: Here is how
The impact of the decisions taken in the meeting of the GST Council is expected to enhance compliance on the part of registered taxpayers. It will be achieved by making them liable to deduct GST on commercial property let out from now on. This will ensure more effective tax collection. Also, it will help in reducing evasion in the commercial property sector.
Another important outcome related to the decisions of the meeting was clarifying the confusion over PLC. It clarified that PLC is bundled with construction services and brought relief for builders. It confirmed that it attracts lower tax rates of 5% or 12% instead of 18%.
Decisions taken during the meeting of the GST Council have opened the way for more streamlined tax laws. It will align them with earlier service tax rulings, providing clarity concerning commercial renting and PLC taxation. These changes aim to increase compliance and reduce tax evasion, easing commercial property and construction operations.
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