Finance Minister Arun Jaitley said the GST Council agreed to cut GST on under-construction residential houses to 5 per cent from the existing 12 per cent, while the tax on affordable housing has been cut to 1 per cent from the current 8 per cent. "We have adopted twin definitions of affordable housing. One on the basis of carpet area and the second on cost. In metros, 60 square metre carpet area and Rs 45 lakh cost of the apartment to fall in affordable housing. In non-metros, it will be 90 square metre carpet and Rs 45 lakh cost. It 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.
"This (GST reduction) decision will certainly give a boost to the construction sector," Jaitley told reporters.
However, Goods and Services Tax (GST) is not levied on real estate properties for which completion certificate has been issued at the time of sale. With regard to lotteries, the GST Council, however, deferred its decision with Jaitley saying that the Group of Ministers (GoM) will meet again to discuss the proposal. Currently, state-run lotteries attract 12 per cent GST, while state-authorised ones attract 28 per cent.