Finance Minister Arun Jaitley announced that the Goods and Services Tax Council has approved to lower the tax rate on under-construction properties from 12 per cent to 5 per cent without an input tax credit. The new tax rates will come in effect from April 1, 2019.

Jaitley added that affordable housing projects will attract 1 per cent tax as against 8 per cent earlier. He also clarified that the definition of affordable housing has been set on the basis of carpet area of flats.

In non-metropolitan cities, a residential house of carpet area of up to 90 square meters and in metropolitan cities, 60 square meters of a house with a value of up to Rs 45 lakh will only be constituted as affordable housing projects. Ajay Bhushan Pandey, Revenue Secretary said that the purchases made before the announcement will also be covered, if flats are still under construction.

Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Bengaluru, Chennai, Hyderabad, Kolkata and Mumbai, including Mumbai Metropolitan Region have been identified as the Metropolitan cities where a house of 60 square meters will come under the affordable housing segment.

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