Builders can now choose between two different tax rates in case of incomplete residential projects, the Goods and Services Tax (GST) Council said on Tuesday. The new reduced tax rates will kick in from April 1.

The Council, which met through video-conferencing, decided to give builders the option of choosing the tax rate — 12% with input tax credit facility or 5% without it, and in the case of affordable housing projects, 8% with tax rebates or 1% without it, revenue secretary Ajay Bhushan Pandey said.

The choice of tax rates in case of buildings that are not completed as on 1 April has to be exercised within a specified time, which will be notified later, Pandey said.

For new projects beginning 1 April, lower tax rates will apply.

Tuesday's decisions bring clarity on taxation of under-construction houses sold during the transition to the new tax system.

The Council had on 24 February decided to lower the tax rate on under-construction residential properties from an effective 12% with input tax credit benefit to 5% without that benefit and on under-construction affordable houses from an effective 8% with tax rebates to 1% without it.