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Small home buyers welcome decision to reduce GST on homes by 4 percent

Developers and housing experts claim that this will increase the sale, as the first time home buyer will have to pay lesser tax

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Good news for home buyers in the affordable sector, up to 60 sq m homes (2BHK) as the GST on these homes has been reduced by 4 per cent. Developers and housing experts claim that this will increase the sale, as the first time home buyer will have to pay lesser tax. The existing tax on a home purchase is 12 per cent, which has been brought down to 8 per cent.

The scheme will be applicable for the homes under Pradhan Mantri Aawas Yojana's Credit Link Subsidy Scheme (PMAY CLSS). Ramesh Nair – CEO & Country Head, JLL India, said, "The GST council's decision to reduce the applicable GST rate for home purchases under the CLSS-PMAY to 8 per cent is the latest measure to ease demand side constraints, especially in the low cost, EWS and affordable housing segments. "

According to Nair, the potential buyers across these (affordable housing) segments are extremely price sensitive and are impacted by even a small change in their overall outlay towards home purchases. Therefore this drop in the applicable GST coupled with the interest subsidy will allow significant savings on the purchase of homes.

Under PMAY a person buying his or her first house in the country can avail the subsidies. Even developers claim that this will boost the sales in the city. Aniket Haware, Managing Director, Haware Developer, said "It (GST reduction) will be a huge and impactfull impact on real estate sector because customers are expecting that GST should fall in real estate sector. Customers weren't willing to buy because of the increase by 4-5 per cent, but I feel if GST goes down we will get positive note from customers. "

Anuj Puri, Chairman, Anarock Property Consultants, has said, " While a lot of action is expected in affordable housing, the segment is still going through a litmus test; its true potential can be more accurately assessed by end of 2018."

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