Over 25,000 buildings in Mumbai Metropolitan Region eligible for redevelopment with ₹30,000 cr value: CREDAI-MCHI
The organisation emphasized that unlocking Mumbai's full redevelopment potential requires directly addressing viability issues. "Approval costs in Mumbai stand at ₹55,200 per square metre, significantly higher than ₹1,800 in Pune and ₹5,500 in Delhi. This highlights the disproportionately high development charges in the city," CREDAI-MCHI stated.
The apex body was reacting to Bombay High Court's ruling that clarified that GST is not applicable where homeowners appoint a developer to carry out redevelopment work.
The legal representatives of CREDAI-MCHI also said that the court merely ruled that GST on development rights is not payable under the reverse charge mechanism—it did not abolish the tax altogether.
Also Read: Motilal Nagar Redevelopment: 5 things to know about Adani Group's latest acquisition in the Mumbai real estate market
The legal representatives stated that developers remain exposed to legal and financial risk until the GST Council or a larger bench of the High Court gives a conclusive verdict.
The Bombay High Court last month clarified that GST is not applicable to developers where homeowners appoint a developer to carry out redevelopment work, provided there is no sale or Transfer of Development Rights (TDR) or Floor Space Index (FSI).
The court quashed the tax demand, noting that the agreement was purely for construction and did not involve any transfer of TDR or FSI.
Harsh Shah, Partner, Economic Laws Practice (ELP)added, "The confusion around the GST treatment of development rights has resulted in a wave of litigations across the country—with cases pending in Bombay, Delhi, Gujarat, and Karnataka High Courts. The judgment by the Nagpur bench of the Bombay High Court has been misinterpreted in some quarters as a blanket exemption from GST, which is inaccurate."
'A clear and consistent interpretation of GST law, in line with the nature of redevelopment transactions, is essential to restore confidence in the sector,' Shah said.
Also Read: Shahrukh Khan's sea-facing building on Mumbai's Carter Road may go in for redevelopment
According to Rohit Jain, Deputy Managing Partner, Economic Laws Practice (ELP), "Developers today face up to four layers of GST—5% on sale to customers, 18% on transfer of development rights, 5% on units handed back to existing residents, and non-creditable GST on construction materials."
Jain said, "These cascading taxes severely impact margins and slow down redevelopment. It is important to clarify that despite recent high court rulings, GST is still applicable—either under forward or reverse charge mechanisms—and the confusion in interpretation must be addressed urgently.
"CREDAI-MCHI, along with several developers, has made detailed representations to the GST Council, and we hope for swift intervention to reclassify development rights as immovable property, which should not attract GST under prevailing laws," Jain said.
Also Read: Dharavi Redevelopment: 5 highlights of the master plan and the ongoing survey
"When you add layers of GST and regulatory ambiguity to that, projects simply do not take off. Solving these issues is not just about helping developers—it is about providing safer homes to thousands living in dilapidated buildings, improving urban infrastructure, and unlocking housing supply," said Sunny Bijlani, Joint Secretary, CREDAI-MCHI.
"Fixing GST interpretation and aligning taxation to ground realities can significantly accelerate redevelopment. These are low-hanging fruits with massive economic and social impact, and we urge decision-makers to act swiftly," Bijlani said.
The apex body concluded in the statement that the Bombay High Court judgment is expected to stimulate redevelopment in Mumbai,a city where vertical growth remains the most practical solution amid limited land availability and ageing infrastructure.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
Business Standard
21 minutes ago
- Business Standard
GST on life, health insurance may be scrapped as Centre pushes exemption
The Centre has suggested removing the Goods and Services Tax (GST) on life and health insurance premiums, Bihar Deputy Chief Minister Samrat Choudhary said on Wednesday. Choudhary, who is the convenor of the Group of Ministers (GoM) on insurance, confirmed that the proposal was discussed during the panel's meeting. The 13-member GoM deliberated on the proposal to exempt individual and family insurance policies from GST. 'The Centre's proposal is clear that the insurance sector's individual and family (policies) should be exempt from GST. This has been discussed and the GoM report will be presented to the Council,' Choudhary said after the meeting. He added that 'all members have given their approval for lowering rates. Some states have given their own views,' while clarifying that the final decision rests with the GST Council. At present, both life and health insurance premiums attract 18 per cent GST. Next steps in the decision-making process The GoM was constituted in September with ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana, besides Bihar. The panel has been tasked with submitting its recommendations to the GST Council by October-end. The panel will now submit its report, including suggestions and reservations voiced by state finance ministers, to the GST Council. The Council will take the final call on whether GST exemption should apply to life and health insurance. How the proposal fits into larger GST reforms The move to ease taxes on insurance is part of a wider reform package under consideration by the Centre. Under the proposed next-generation GST framework, the tax would be streamlined into two rates: 5 per cent and 18 per cent, depending on whether products fall into the merit or standard category. Revenue from GST on insurance In FY24, the Centre and states collected ₹8,262.94 crore from GST on health insurance premiums. Additionally, ₹1,484.36 crore came from GST on health reinsurance premiums, underscoring the significant revenue implications of any exemption. On Wednesday, Finance Minister Nirmala Sitharaman also interacted with various GoMs formed by the GST Council. These included groups working on compensation cess, rate rationalisation, and taxation of health and life insurance, all part of the broader effort to revamp the indirect tax system. PM Modi on GST overhaul During his Independence Day address at the Red Fort, Prime Minister Narendra Modi announced a drastic cut in GST on common household items, hinting at sweeping changes in the indirect tax regime. 'GST rates will be reduced drastically. Tax will be reduced for the common people,' he said.
Time of India
21 minutes ago
- Time of India
New GST rates list 2025: ACs, cars, insurance and even mobile bills may get cheaper
What are the new GST rates 2025 being discussed, and how may they impact you?The government is pushing Next-Gen GST, a proposal that could simplify slabs and cut prices for many essentials, services, and big-ticket the proposed new GST rates list:From 4 slabs to just 2 (5% and 18%)ACs, TVs, and small cars may get cheaperInsurance premiums may drop from 18% to 5% or even zeroTelecom industry pushing for mobile and broadband bills to fall to 5% GSTPackaged foods and daily essentials may move to 5%Tobacco, pan masala, luxury goods to face 40% 'sin tax'States warn of heavy revenue loss, up to ₹9,000 crore annuallyPM Modi calls it a 'double Diwali' giftCongress says GST 2.0 proves GST 1.0 was flawed, the 'Gabbar Singh Tax'Govt says the long-term goal is one nation, one tax by 2047Final decision will rest with the GST Council meeting in September. Show more Show less
New Indian Express
32 minutes ago
- New Indian Express
The grand GST reboot: What to look at and where to focus
18% slab contributes the biggest chunk of GST revenue Price, quality, quantity, packaging and branding vary significantly depending on the segment of consumers. Depending on the purchasing power, the propensity to consume, and the preferences and habits of consumers, there's a significant variation in the products available in Indian markets. In this context, setting tax rates for heterogeneous commodities serving different consumer groups with varying income levels is a challenge and policymakers often face the dilemma of whether to tax or exempt a certain commodity. Currently, there are seven slabs – nil rate, 0.25%, 3%, 5%, 12%, 18%, and 28%. Then there are a few specific rates like 1% applicable to tax collected at source for taxpayers involved in manufacturing, 1.5% relevant to the construction of affordable residential apartments, cutting and polishing diamond and diamond job works, 6% applicable to brick kilns, and 7.5% applicable to construction of residential apartments other than affordable residential apartments. Lastly, selected items such as coal and lignite, tobacco and tobacco products, aerated waters, carbonated beverages, and certain motor vehicles attract GST compensation cess, over and above the applicable GST rate. Official data based on FY24 GST collections show that 5% slab contributes 6-8% revenue, 12% slab accounts for 5-6% revenue, 18% slab provides 70-75%, 28% offers 13-15%, while others contribute 1-2%. However, this isn't a standard breakup. As the minutes of the 45th GST Council meeting showed, 3% slab contributed 1% revenue, 5% slab 13.6%, 12% accounted for 7%, 18% contributed 61.4% and 28% 17%. Which means revenue composition across GST rates will differ over time. The big challenge of addressing revenue uncertainties Moreover, the composition of GST revenue across rates differs from the all-India average for states. This reinforces the fact that the revenue impact of the GST rate rationalisation varies across states, and there will be no mechanism to perceive the changes as long as revenue is not realised. As Mukherjee observed, the state's GST revenue comprises state GST collections, and IGST settlement on the SGST account. But information on rate-wise IGST settlement cannot be assessed based on the present GSTR system. Since IGST settlement constitutes a significant share of the State GST revenue, the lack of information on rate-wise IGST settlement makes it challenging to attribute revenue realisation across various slabs. It's also worth noting that IGST collections from a state is not the revenue to be realised in the state and will be adjusted to the destination states, where goods and services will be ultimately consumed. Similarly, the GST compensation cess collection from a state is not the state's revenue. Therefore, given the GST return system, states cannot easily assess the revenue across GST rates. Revenue uncertainties will prevail if there is any significant change in the GST rate structure from the current structure. Clearly then, GST revenue cannot be assessed across rates with certainty. The question is how will the Council address the revenue uncertainties? Based on NSSO's Household Consumer Expenditure Survey for 2022-23, the author assessed the distributional impact of GST for rural and urban areas across income groups. And the results show some interesting perspectives. The balancing act that needs to be pulled off First, it confirms that GST is progressive, the bottom 50% households and the middle 30% each bear 31% of the tax burden, while the top 20% bear 37% of the tax burden in rural areas. In urban areas, the bottom 50% bear 29%, the middle 30% bear 30%, and the top 20% bear 41% of the tax burden. On the other hand, only 1% of total expenditure attracts a 28% GST in both rural and urban areas, while just 2% of the total outlay attracts a GST rate higher than 28% across all regions. The share of average Monthly Per Capita Expenditure (MPCE) on food decreases among higher income households, and increases on non-food items further supporting the argument that exemptions and lower GST rates on food are contributing to the progressive nature of GST, and that higher GST rates on non-food items may help make the GST progressive. Consumption expenditure varies in rural and urban areas and as the distribution of average MPCE across GST rates shows that 45% of total expenditures fall under the exempted to very low (5%) GST rates category in rural and urban areas. One-fourth of total spending falls under the 5-12% slab in rural areas, while in urban areas it's 23%. Similarly, 18% of total spending in rural areas and 20% in urban areas fall under 12-18%. In both regions, only 1% of total expenditure is taxed at 28%, and is mainly on non-food spending. Only 2% of total outlays attract a GST rate higher than 28% across all regions. Interestingly, consumers from low income groups in rural areas and high income groups in urban areas both consume more items under the exempt and exempt to 5% GST rate slabs. This only suggests that reducing the list of exempted items and/or increasing the GST rate on these items may increase the tax burden for low income households in rural areas, while the impact will differ for urban areas with some exceptions. Therefore, any attempt to increase the GST base by shrinking the list of exempted goods may be weighed against the benefit of additional revenue generation from the rise in the GST base, versus the additional tax burden that rural consumers from low income groups must bear, the paper noted. Further insights Coming to the next slab of 5-12%, the share of average MPCE of consumers from low income groups is higher than high income households, so imposing a higher tax on these items may increase the tax burden on lower fractile classes across all regions. As far as the 12-18% slab, it's progressive except for the top two fractile classes in rural areas, while in urban areas, it's progressive for about half the fractile class. Therefore, increasing rates on these items may not be regressive if designed carefully. Likewise, in both rural and urban areas, the share of average MPCE on items falling under the 28% and above is higher for consumers in the higher fractile classes, which shows that imposing a higher tax on these items may not be regressive. Of the 448 items covered in NSSO survey, 51 are sub-totals and totals and seven are exempted from GST. Among the remaining 390 items, 154 are exempted or attract a 5% GST. Of these 154 items, 105 (i.e., 68%) are food items, while the rest are non-food items. Seventy-four items attract a GST rate of 5% to 12%; 35 are food items, and 39 are non-food items. One hundred thirty-six items attract a GST rate of 12% to 18%; 22 are food items, and the rest are non-food items. Three of the four items attracting a 28% GST are non-food items. Similarly, out of 10 items attracting a GST rate of more than 28%, nine are non-food items. This indicates that most items attracting GST rates of 12% or above are non-food items.
