New Delhi, Feb 24 (Agencies) : In a major boost to troubled Indian real estate sector, 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, in a big relief to home buyers.

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, Union Finance Minister Arun Jaitley said.

The new tax rates will come into effect from April 1, 2019.

Currently, GST is levied at 12 per cent on payments made for under-construction property or ready-to-move-in flats. Twelve per cent is also levied in cases where completion certificate is not issued at the time of sale.

No tax is levied in cases where completion certificate has been issued at the time of sale.

However, builders will not be able to claim input tax credit (ITC) under the new GST rates.

The council, headed by Jaitley, decided on cutting tax rates on under-construction housing property after due consideration to reports of a group of ministers (GoM) on real estate sector.

"This [GST reduction] decision will certainly give boost to construction sector," Jaitley told reporters.

Bihar Deputy Chief Minister and Finance Minister Sushil Kumar Modi took to Twitter and said the GST rate for affordable housing was reduced from 8 per cent to 1 per cent and for non-affordable from 12 per cent to 5 per cent without ITC.

"Definition of affordable changed to 90 sq mtr and 60 sq mtr for non-metro and metro with a capping of Rs 45 lakh for both," he added.