As the government announced a rate cut for real estate in its budget speech, theGST Council met for the same on 24 Feb, 2019 and gave a big relief to the real estate sector by reducing the rate to 5% on under-construction houses. Special rate of 1% introduced for affordable homes however tax benefits on raw materials such as steel, cement and other gain would be withdrawn.

It should be noted that currently affordable housing faces an 8% effective rate while 12% levy on under-construction properties. The Affordable house category include house with a carpet area of 60 square metres (around 650 square feet) in a metro city and 90 square metres (970 square feet) in non-metros, costing upto Rs 45 lakh.

This move will have a positive impact on the real estate sector as a result home buyer will get some relief. This rate cute will be applicable from April 1, 2019 thus giving real-estate builders and developers a few days time to work on the new rate. Thereafter general public or home buyers can assess the impact of this rate cut.