While there is a general consensus in the GST Council about the need to give tax relief for the housing sector to boost demand, a section of it is concerned about large scale tax evasion by builders and so it wants to ensure that relief should be structured in such a way that revenue leakage is plugged. The proposed GST rate cut with denial of input tax credit to builders would come with a condition that builders must ensure 80% of the inputs are procured from GST-registered dealers. Kerala finance minister Thomas Isaac feels that including capital goods as inputs would enable developers to meet the condition easily and opening up a window for them to procure other building materials from unregistered dealers. This, Isaac argues, could result in lower revenue collection for the government, and facilitate more evasion. Punjab feels the fixed formula of taking one-third of the cost of the residential unit as abatement for the value of land is skewed, as it could deprive some states of their legitimate revenue. State\u2019s finance minister Manpreet Badal is leant to have argued that instead of a blanket abatement, a formula could be evolved linking it to prevailing circle rates. Currently, transaction of land and under-construction houses for which completion certificate has been issued are outside GST purview. As for under-construction houses for which completion certificate has not been issued, the GST rate at present is 12%; the proposal by a group of state finance ministers is to cut the rate to 5% without ITC benefit to the developers. There are also other proposals for a reduction in the rate to 3% from 8% for \u2018affordable housing projects\u2019 as defined by the Reserve Bank of India and for a three-tier structure with a benign 1% rate for low-income housing. \u201cIf a buyer purchases a house in Delhi for say Rs 1 crore, GST would be levied on only two-third of the value after assuming the land value to be a third of the cost. This is favourable to Delhi as it gets revenue on larger portion of the purchase even though the land cost might have been higher than assumed by the formula. But for a similarly priced house in Punjab, the state would lose revenue if circle rate was to be used for tax calculation, given that land cost would be lower than a third of the total value,\u201d Rajat Mohan, partner, AMRG & Associates said.