INDORE: Home buyers have a reason to smile this year as tax deduction on affordable and under-construction housing property has given a much awaited relief to the common man.

The rate cut is seen as a move that is set to boost sale of houses in city from April as new levies are applicable from next financial year starting April 1.

The new rate of levy is set at 5 per cent on under-construction housing property from the existing 12 per cent and 1 per cent on affordable housing from 8 per cent.

Confederation of Real Estate Developers of India (Credai) Indore Chapter president Naveen Mehta said, “Real estate sector will get a boost after this rate deduction as cost at consumer end will drop. People who were on hold will resume buying. A major pick up is expected in affordable segment.”

Realtors said affordable segment is expected to see a huge jump with rate cut in city. According to Credai, of the total realty projects in past one year, about 70 per cent have come in affordable segment costing up to Rs 45 lakh sensing good demand.

Reema Rastogi, a house wife said, “This is such a big relief for us. We were postponing our plans to buy house since so long because there was so much of confusion regarding GST. But decision is very good as overall cost will reduce sharply.”

Mehta said, “Sales of under-construction houses will also increase otherwise people were reluctant to go for under-construction because 12 per cent levy was too high.”

According to realtors, increase in sales for under-construction housing will pump in money to projects that were stuck due to financial constraints.

As per new GST levies, builders will not be able to claim input tax credit (ITC) in both categories.

But no GST on transfer of development rights (TDR) and lease premium will benefit builders, according to Credai.