Indeed, exempting low-cost housing from service tax—Naidu told CREDAI his ministry had petitioned the finance ministry to continue with the exemption under GST—has the same problem. In this case, too, the loss in tax collections will have to be made up by raising it for other housing segments and it also encourages tax arbitrage by developers who will try to pass off their housing units as low-cost ones. Indeed, as chief economic advisor Arvind Subramanian has argued in a recent column in this newspaper (goo.gl/kc6A9U), including land and real estate in GST actually benefits the sector. While clarifying that bringing the sector under the ambit of GST doesn’t do anything to stamp duties—states have opposed this in the belief their ability to levy stamp duties will be impacted—Subramaniam points out that the 4.5% service tax on works contracts in real estate translates into an effective rate of 12% in the absence of GST since no input credits are available on the taxes paid on inputs used in construction such as iron and steel and cement. Hopefully, the GST Council will keep in mind the point made by Subramanian and bring land and real estate into the ambit of GST in order to lower effective taxation.