GST Council to soon clarify GST Exemption on RERA

The GST Council is expected to clarify soon that the Real Estate Regulatory Authority (RERA) will be exempt from paying Goods and Services Tax (GST), according to a media source citing an official.

The regulatory authority, which acts as a regulator for the realty sector, was established in several states to enhance openness in real estate developments, protect consumer interests, and establish an adjudicating process for quick dispute resolution.

Following conversations with RERA officials about the nature of their duty, it was determined that GST is not relevant to them, according to the official, who added that RERAs are supported by respective state governments, thus levying GST would imply taxing state governments.

The GST Council, chaired by the Union Finance Minister, is expected to meet before the Model Code of Conduct for the upcoming general election in April-May. The GST Council conducted its last meeting on October 7, 2023.

Accounting and advisory business professionals stated that prior to July 2022, certain services provided by key regulatory organizations such as the RBI, SEBI, and IRDA were not subject to GST. This exemption was revoked on July 18, 2022, sparking debate over the tax consequences for RERA groups as well.

“Furthermore, in the residential real estate sector, Input Tax Credit (ITC) is not permitted, therefore omitting RERA authorities from GST calculations might significantly lower expenses for both developers and homebuyers. As a result, a clarification from the GST Council on this issue would be extremely useful to the sector,” he said.