New Delhi [India], Oct. 15 (ANI): Delhi Deputy Chief Minister Manish Sisodia has written to Union Finance Minister Arun Jaitley, urging him to bring the real estate sector under the ambit of the Goods and Services Tax (GST) on account of curbing black money and increasing transparency in the domain.
In a letter dated October 15, Sisodia argued that if GST was implemented in all steps involved in the development of the real estate sector, there would be accurate records available of every transaction and the input tax credit(ITC) drawn. He also claimed that the move, if implemented, could help in curbing the flow of black money in the sector.
"In the real estate sector, the primary step is the sale/purchase of land. We are seeing that not only in big cities and towns, but even in far-flung villages, those with black money are indulging in land hoarding, thereby illegally forcing genuine buyers to buy land at exorbitant rates. For developing property on such lands, purchase of raw material to work contract and so on, it is widely prevalent that the entire work is done without paying little or no tax, and in this entire business, there is hardly any tax collection. So far, no OST is being levied on developed/readymade property," the letter stated.
"Therefore, right from sale/purchase of land to development of property and its transactions - the entire process has led to destruction of input tax credit chain. This is how black money is thriving in real estate sector. My view is that if GST is implemented in all steps involved in development of real estate, then every recorded transaction will lead to tax input credit and exorbitant hike in land prices will be checked, entire chain will remain intact and flow of black money in real estate could be curbed," it further noted.
Drawing upon the 'extraordinary political willpower' required to implement this, Sisodia suggested that the topic be discussed in the next meeting of the GST Council, scheduled for November 9.
"Having strongly argued in favour of bringing real estate under the GST ambit, I have no hesitation in stating that extraordinary political willpower will be required for taking this step. The GST Council has made extraordinary progress in your leadership and now I am hoping that the Council is now in a position to take a call on the real estate sector in its next meeting," the letter further noted.
Delivering the 'Annual Mahindra Lecture' on India's tax reforms at the prestigious Harvard University in Washington, Jaitley had said 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.