GST Council meet tomorrow: Inclusion of real estate, cut in tax rates may bring cheer before Budget

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Just two weeks before the Budget, GST Council is expected to consider a reduction in tax rates for some items, about 80 going by some reports, and the inclusion of real estate in its 24th meeting tomorrow.

The meeting comes amid continuous dip in GST revenue collection in the last two months. The collection registered a sharp dip to Rs 80,808 crore in November, from Rs 94,063 crore in the launch month in July last year.

Change in tax rates

As Budget can no more tinker with indirect taxes due to implementation of GST, the Council is expected to announce tax concessions and reduction of tax rates on common man items and services, including household goods, agriculture products, housing sector inputs such as cement and steel.

Real estate in GST:

The Council is likely to discuss inclusion of real estate under GST and announce the rollout date for the same. According to some reports, Council may set a 12 per cent rate for the real estate sector and may also decide to subsume stamp duty and registration charges in GST. The likely date for inclusion of real estate under GST could be the start of new financial year, April 1.

“Discussion of real estate inclusion in GST is the key agenda of the GST Council which is scheduled to meet on January 18th,” a senior government official told ANI.

Single GST return form

It may also announce simplification of return filing process. The three return forms — GSTR1, GSTR2 and GSTR3 — may be clubbed into a single form for easier return filing.

This would drastically reduce the compliance burden on the tax payers as they will have to file 12 returns a year instead of 37 returns currently.

Since GST rollout in July, government has extended return filing dates many times.

Rollout of e-way bills

At the last GST council meeting in December, roll out of e-way bill was decided for February 1. So the council may iron out issues in e-way bill mechanism for smooth implementation of e-way bills from next month.

 

Stamp Duty And Tax On Gift Deed Of Property

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Gifting is an act, through which a person voluntarily transfers certain rights in an asset to another person, without any consideration. Gifting of a house property, has certain income tax and stamp duty implications.

Legal requirements for gift

As per the Transfer of Property Act, the transfer of a house property under a gift, has to be effected by a registered instrument/document, signed by or on behalf of the person gifting the property and should also be attested by at least two witnesses. The registrar shall ensure that proper stamp duty has been affixed on the gift deed/document, when it is presented for registration. The amount of stamp duty and registration charges payable, with respect to a gift deed, are generally the same as in the case of a regular sale. However, if the gift deed is executed between some specified close relatives, some states provide concessions in stamp duty. For example, Maharashtra used to have a cap on stamp duty payable on gift of a residential or agricultural property to one’s spouse, children, grandchildren or wife of a son who has died, at Rs 200, till May 16, 2017. Now, the stamp duty applicable is three per cent of the market value of the transaction.

Income tax implication

According to income tax laws, the value of all the gifts received by a person during a year is fully exempt, as long as the total of such gifts does not exceed Rs 50,000 in a year. If the value of all the gifts taken together exceeds Rs 50,000, then, the aggregate of the gifts received become taxable without any threshold exemption. However, income tax laws also give a favourable treatment, to gifts between two close relatives. Consequently, the gift of any asset (whether movable or immovable) made to certain specified relatives, is fully exempt from tax in the hand of the recipient, without any upper limit. The list of close relatives includes parents, spouse, siblings, siblings of the spouse, lineal ascendants and descendants of the person and his/her spouse. The list also includes spouse of the abovementioned persons.

If the house property is received as a gift from a relative, the first incidence of tax will arise, when you sell the property. The cost for the purpose of income tax, shall be the taken as the cost that was paid for the property by any of the previous owners. The profits shall be treated as short-term or long-term, depending on whether the aggregate of your holding period as well as that of the previous owner who had actually paid for it, is more than 36 months or not.

If the holding period as computed above is less than 36 months, the profit accrued on the sale of such property, shall be treated as short-term and will be added to your regular income and taxed at the applicable slab rate. However, if the holding period is more than 36 months, you will get the benefit of indexation on the cost of the property, as well as the option to claim exemption from payment of 20% long-term capital gains tax, by investing in a residential house or in capital gains bonds of Rural Electrification Corporation (REC) or National Highway Authority of India (NHAI).

Examining A Muslim Woman’s Right To Property

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Article 14 of the Indian Constitution mandates equality among all its citizens. With the interesting interplay of socio-legal forces, Hindus, Muslims and Christians in India are governed by their respective personal laws – which includes property rights as well. As Muslims in the country do not have codified property rights, broadly speaking, there are governed by either of the two schools under the Muslim law – the Hanafi and the Shia. In India, a large number of Muslims are Hanafis or Sunnis. While the Hanafi school recognises only those relatives as heirs whose relation to the deceased is through a male. This includes son’s daughter, son’s son and father’s mother. The Shia school, on the other hand, favours no such discrimination. This means that heirs, who are related to the deceased through a female are also accepted.

A few general rules of inheritance for women are:

The daughter

Under the Muslim law, the laws of inheritance are rather strict. In keeping with its ideology that a woman is half the worth of a man, a son takes double the share of a daughter. But the daughter is the absolute owner of whatever property she inherits. If there is no brother, she gets half a share. It is legally hers to manage, control, and to dispose off according to her wishes.

She is eligible to receive gifts from even from those she would inherit from. This is contradictory because she can inherit only one-third of the man’s share but can get gifts without any hassle.

Till a daughter is not married, she enjoys the right to stay in her parents’ house and seek maintenance. In case of a divorce, charge for maintenance reverts to her parental family after the iddat period (approximately three months) is over. But, if her children are in a position to support her, the responsibility falls on them.

The wife

In the famous Shah Bano case, the Supreme Court had held that in case of a divorce, it is the responsibility of the husband to make reasonable and fair provision to maintain his former wife even after separation under Section 3 (1Ha) of the Muslim Women (Protection of Rights on Divorce) Act, 1986. This period extends beyond iddat as the woman retains control over her goods and properties.

In the event of the death of her husband, a widow gets the one-eighth share (when there are children) but will get one-fourth share (if there are no children). If there is more than one wife, the share may diminish to one-sixteenth.

The mother

A Muslim mother is entitled to inheritance from her children, if they are independent. She is eligible to inherit one-sixth of her dead child’s property if her son is a father as well. In the absence of grandchildren, she would get the one-third share.

What more?

There are other provisions, too, in the law which ensure financial security of a Muslim woman.

 The maher (entitlement)

This is the total money or property that a wife is entitled to get from her husband at the time of marriage. There are two types of maher: prompt and deferred. In the former case, the amount is given to the wife immediately after marriage; in the later, the amount is given to the wife when her marriage has ended, either upon the death of her husband or by divorce.

The wasiyat (will)

A Muslim cannot give away more than one third of his/her total property through a will. In circumstances where there are no heirs in the estate as prescribed by law, the wife may inherit a greater amount by will.

The hiba (gift)

Under the Muslim law, any type of property may be given as a gift. For a gift to be valid, a declaration of the wish to make the gift must be made which should be accepted by the receiver.

GST Notification Doesn’t End Govt’s Power To Levy Excise

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After a hectic day of parleys and opinion from the attorney general, the government feels it retains power to levy excise duty on goods other than petroleum even after the provision of the Constitution amendment law was notified on September 16.

A top government source told ET that transitional amendment in the Constitution (122nd Amendment) (GST) Act, 2014, to roll out the goods and services tax (GST) would tax (GST) would provide cover to the government till the time this reform is implemented.

“We have had discussion with AG and he opined that there is no problem with the notification,” the official said citing Section 19 of the amendment.

This provision says: “Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any state immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act, shall continue to be in force until amended or repealed by a competent legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier.”

The official said there are some constituents that need to be seen in the notification.

Firstly, the Section 19 says tax on goods and services to be tax ed in any `state’, which refers to geographic entity of state and not by states. Secondly, withdrawal of power to levy tax lies with the competent authority and not the state legislature.

This protects the power to impose central levy during the transitional period of one year.

Revenue secretary Hasmukh Adhia tweeted: “The department of Revenue examined the validity and implications of notfns dated 10th and 16th Sept wrt existing taxes imposed by the Union and states. “There is no legal infirmity in these notifications. Law dept has confirmed that there appears to be no legal requirement to issue any further clarification or notification in this regard.”

ET had reported on Monday that massive confusion had arisen after the Centre notified certain provisions in the constitution amendment law for GST with effect from September 16.

The notification said the government will not levy excise on goods other than petroleum products from this date, implying loss of power to tax other goods.The notification also binds states to accept GST within a year or they will lose power to tax.

The Constitution (122nd Amendment) (GST) Act, 2014, passed by Parliament last month to roll out GST, has made changes in Entry 84 of List 1 or the Union List of the 7th Schedule of the Constitution.

Essentially, the amended list provides that excise duty can be levied only on petroleum and its products and tobacco and tobacco products, thereby limiting Central Excise Act’s scope to these specified products.

Experts felt through this notification the government had surrendered power to levy excise except in goods mentioned.

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