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New Delhi: The Modi government during the 56th GST Council meeting decided to reduce tax on construction materials. However it is important to note that its impact may be seen differently on those building houses and those buying flats. People constructing their own houses will get direct relief but for flat buyers the matter is likely to be a bit complicated. The GST reduction will have an immediate and significant impact for those who are currently building their own homes or preparing to do so in the future. The financial burden on them will ease a little. According to the decisions taken in the GST Council meeting GST on cement has now been reduced from 28 percent to 18 percent. Cement usually accounts for around 20 percent of construction costs. This means the change could lead to nearly 2 percent savings in the overall cost. In addition GST on sand-lime bricks and wood-based products has been reduced from 12 percent to 5 percent. Together these make up about 5–10 percent of construction costs. This implies that the common man could get even more relief in the total cost. Here are some of the key details: In India most houses are still constructed individually especially in rural and semi-urban areas. In such cases this tax reduction can directly benefit the common man. For those buying flats or apartments the picture is a bit different. Experts related to the real estate sector say that most builders get the work done through contractors. While purchasing materials like cement contractors pay the tax but they usually claim the benefit through Input Tax Credit (ITC) i.e. GST rebate. The impact will remain limited on commercial buildings constructed for rental purposes. In commercial buildings construction is carried out through contractors and the GST burden is adjusted through ITC (Input Tax Credit). In such cases it is quite possible that customers may not get the benefit of tax concessions on the purchase of shops or commercial spaces. Will builders provide relief? After the GST reduction the question arises whether builders will directly pass on any relief to flat buyers. Do they have any legal or moral obligation to ensure that the benefit of tax savings reaches the buyers? For now the government has left this responsibility to the builders on the basis of trust instead of making strict rules. Developers will now have to understand the legal expectations manage buyers’ expectations and prepare strong justifications for their pricing decisions.