GST rate cut on housing to address needs of home buyers: CII

The GST Council's decision to cut the rate on houses under construction from 12 per cent to 5 per cent as well from 8 per cent to 1 per cent on affordable housing will address the needs of home buyers and boost offtake of housing, CII said Sunday.

"The real estate and housing sector drives construction and is a key employment generator and we believe today's decisions for a better and simpler tax regime will boost offtake of housing, thereby also contributing to job creation," CII Director General Chandrajit Banerjee said.

He said the GST Council has provided a great relief to the sector and is a step towards hastening growth for this very important sector.

In a big relief to home buyers, the GST Council Sunday slashed tax rates on under-construction housing properties to 5 per cent without input tax credit, from the existing 12 per cent, Finance Minister Arun Jaitley said.

The Council also cut GST rates on affordable housing to 1 per cent from the current 8 per cent and expanded the scope of affordable housing to those costing up to Rs 45 lakh and measuring 60 sq metre in metros and 90 sq metre in non-metro cities.

The new tax rates will come into effect from April 1, 2019.

Currently, the GST is levied at 12 per cent on payments made for under-construction properties or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

However, builders will not be able to claim input tax credit (ITC) under the new GST rates.