The construction sector will warmly welcome the decision of the GST council to substantially decrease the GST of building under construction and those that are going to be constructed.

The GST Council on 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.

When the GST of houses costing up to 45 lakh will come down by one per cent, big gains can be expected. Earlier, the construction cost after deducting the tax paid for cement and steel by the builders formed the basis for GST.

But many of those who bought house or flat didn’t get this benefit. When the new GST rate comes into effect from April 1, it would be impossible to baffle consumers. The above announcement of the Centre may be a concession given, eying upcoming Lok Sabha election but the gain made by several sections of people out of this is not little.

The tax relief to be experienced by middle class people by brining houses up to 90 sq metre and costing up to Rs 45 lakh under low cost houses is not small.

Amid the rocketing prices of construction materials and land price in city area, the hurdles faced by commoners in building a house of their own is many. The rise in the land price in urban areas are the reason for more takers for flats and apartments.

As per the existing GST norms, those who buy new flats or house also have to pay 8 per cent as registration cost besides GST. The new GST will drastically cut the expense.

Though the tax concession will reinvigorate the construction sector, people will not get the desired effect of this concession, if nothing is done to control the runaway prices of construction materials.

In the case of construction cost, Kerala leads other states. For cement alone the price per packet went up by Rs 100 within a month.

Of late, the Centre has been trying to implement the concessions announced in the interim budget. The government wants it to get it done before the Lok Sabha election.

For instance, from Kissan Samman Nidhi that gives Rs 6000 to every farmer, the first instalment of Rs 2000 is already paid to more than one crore farmers.

The intimation is that all people who would submit application for the Ndihi before March 31 will be eligible for the first instalment.

Even in Kerala, lakhs of farmers have already submitted the application and are awaiting the first instalment. Though the Congress pooh-poohs the scheme saying that the government is insulting farmers by giving them Rs 6000, people are not seeing the scheme like that. This is evident from the presence of a large number of applicants for the scheme.

However, any incumbent government is Numero Uno in luring people using tricks, ahead of elections.