Good news for first-time homebuyers: GST relief for low-cost houses comes into effect from Jan 27

In a move that will benefit the homebuyers, the Central government has reduced the Goods and Services Tax (GST) rate on the purchase of homes under the credit-linked subsidy scheme (CLSS) part of the Pradhan Mantri Awas Yojna (PMAY) to 8 percent from the current 12 percent.

Houses that are already under construction and are being built under the CLSS can also avail the benefit.

And what's more, the new rate will come into effect on Saturday, January 27.

Under the CLSS, a first-time homebuyer with an income of up to Rs 18 lakh per annum can get a benefit of about Rs 2.7 lakh while buying a house or an apartment of up to 150-square-metre (1,615 sq ft) carpet area. These first-time buyers will get the CLSS benefit under the PMAY even if they do not qualify for the CLSS, the Times of India reported.

The move is expected to bring cheers to homebuyers, developers and builders. "The decision will give a push to the real-estate sector — particularly affordable housing — as prices will fall by up to 4 percent," said Getamber Anand, chairman of the Confederation of Real Estate Developers' Association of India (Credai).

According to experts, the new move will accelerate infrastructure development and housing projects as part of the Central government's push housing for all by 2022.

However, people who do not qualify for the CLSS will have to pay 12 percent GST for the same house.

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Homebuyers can only get the benefit from the move if the builders or developers have offered them timely possession of the houses.

Some people took to social media to bemoan the fact that this GST rate cut would not benefit them because their houses had not been handed over to them quite a few years now.

"We are waiting to get our house for 6-8 years paying bank interest. Thousands of homebuyers of Lotus Panache need your attention today," said a home buyer Sunita Budhiraja in a tweet.