Industry body FICCI has welcomed the decision of the GST council to slash tax rates on under-construction housing properties to 5 per cent without input tax credit, from the existing 12 per cent.

Sanjay Dutt, Chairman, FICCI Real Estate Committee and MD and CEO TATA Housing and TATA Realty and Infrastructure Ltd while applauding the move said that, "the government has very timely assessed the need of the hour. The customers needed this relief. It will help unlock value from under construction projects, which is critical to restore confidence in the developers as much as the customers."

The GST Council Sunday had slashed tax rates on under-construction housing properties to 5 per cent without input tax credit, from the existing 12 per cent.

He further added that the extension of definition to housing prices within INR 45 lakhs will lift sales in this segment now falling in the affordable category across cities and help customers as well as developers not to mention encourage lenders allocate or make available more capital for this segment.

"The input tax credit is critical for the developers and many would get hit. The Government should reconsider this aspect, also the affordable segment will gain much needed focus with this policy," he said.

Dutt also expressed the need of similar decision on reducing the GST on Cement from 28% to single digits as it directly impacts the affordability of houses.

Rajeev Piramal, Co-Chairman, FICCI Real Estate Committee and Vice Chairman and Managing Director, Peninsula Land Ltd said, GST council's decision on reducing the tax rate on under-construction homes to 5 per cent and significantly slashing the rate on affordable homes to 1 per cent from 8 per cent is a win-win situation for both developers and home buyers.

The government's decision on expanding the scope of affordable housing is in sync with its vision of 'Housing for all by 2022'. We believe this move will encourage home buyer sentiments and will significantly boost the demand for affordable homes, he said.