GST IN Real Estate: Complete Guide 2025
The Goods and Services Tax (GST) has continued to shape how residential and commercial properties are priced and purchased in India.
This guide will go deeper into understanding how GST is applied to under-construction properties and ready-to-move properties and help you in understanding the whole registration process.
What is the GST on property Purchases in India?
In India, GST in real estate is majorly applicable for under construction properties and various other services in the sector. It does not apply to ready-move properties.
| Property Category | GST Rate | ITC (Input Tax Credit) | GST Applies when? | Notes |
|---|---|---|---|---|
| Under-construction affordable residential property | 1% | No | Booking made before obtaining completion certificate | Must meet value & carpet area limits |
| Under construction residential property | 5% | No | Booking made before obtaining completion certificate | Most urban apartments fall here |
| Commercial under construction units | 12% | Yes | Before Completion certificate | Shops, offices, retail units |
| Ready to move in property | 0% | N/A | N/A | No GST |
| Resale property | 0% | N/A | N/A | Treated as sales of immovable property |
| Land | 0% | N/A | Exempted | Only stamp duty |
GST of 18% gets levied if the land which comes under development services that may include common amenities, land-levelling, water supply. As these services come under work contract/ development service, the GST is levied on their construction, not on the land itself.
Athough GST plays a crucial role in deciding the cost of the home, it influences whether buyers prefer Ready-to-Move-in-Property or Under Construction Property.
If you are not sure which would be best for you, you can explore our detailed comparison between Ready-to-Move-in Vs Under Construction Property.
GST for Flats Below ₹45 Lakhs (Affordable Housing)
Flats below ₹45 lakhs have a set rate of 1% without input tax credit. This is done to make owning a home accessible to more homebuyers. This initiative aligns with the government goal for encouraging the vision of “Housing for all”.
| Criteria | Metro Cities | Non Metro Cities |
|---|---|---|
| Carpet Area Limit | Up to 60 sq. m. | Up to 90 sq. m. |
| Maximum Price | ₹45 Lakhs | ₹45 Lakhs |
| GST Rate: | 1% | 1% |
These rates are only applicable for under-construction affordable housing properties.
Although GST plays a crucial role in deciding the cost of the home, it influences whether buyers prefer Ready-to-Move-in-Property or Under Construction Property.
If you are not sure which would be best for you, you can explore our detailed comparison between Carpet Area Vs Built Up Area Vs Super Built Up Area.
What is the GST on flats?
GST does not apply to ready-to-move properties which contain a Completion Certificate or Occupancy Certificate issued by the authorised body.
If the completion certificate is not issued or any interior work is going on, it will be considered as an under-construction flat, and GST will be applicable on it.
What is the GST on flat registration?
GST on flat registration is not levied in India, which contains a valid completion certificate or occupation. This exempts the flat from GST.
What is a Completion Certificate?
It is a legal document issued by the local municipal or development authorities that certifies that a property has been constructed in accordance with the building plan and complies with the laws and regulations.
What is the GST on land?
GST applies when the transaction involves the sale of land with an immovable property such as a building or a ready-to-move-in house. or as part of a sale involving construction services.
GST is not applicable for land purchases that do not involve any construction activities and are solely for the sale of vacant land. However, the stamp duty and the registration charges will be applied.
How to calculate GST
Step 1. Identify the base price of your property, excluding any additional fees or costs.
Step 2. Check for the applicable GST based on your property type. Refer to the table above to know the GST rates:
Step 3. Multiply the base price of the property with the applicable GST rate to finalise the amount.
Step 4. Add the calculated amount to the base price of the property to get the total purchase cost of the property.
Example:
- Base price: ₹30,00,000 (affordable housing category)
- GST rate: 1%
- GST amount: ₹30,00,000 × 1% = ₹30,000
- Total cost: ₹30,00,000 + ₹30,000 = ₹30,30,000
What is the GST on the Government Housing Scheme?
Under key initiatives like Pradhan Mantri Awas Yojana (PMAY) & Rajiv Awas Yojana the GST rate was reduced to 1% to decrease the financial burden of the home buyer. By doing this the government aimed at helping people from economically weaker sections to make home ownership affordable.
Conclusion
GST simplified the whole process of real estate taxation that was earlier really complex. GST only applies to under-construction property at 1% for affordable housing and 5% for other residential units. GST is exempted for ready-to-move-in properties.
FAQs
What is 1% and 5% GST?
- It is the rate of GST calculated for the type of under-construction property. For affordable property the GST rate is 1%, and property in urban areas has a GST rate of 5%.
Who pays GST on sale of property?
- The buyer pays the GST for the newly constructed property. The seller does not usually pay GST on constructed property.
Is real estate exempt from GST?
- GST on the sale of land is exempted, but if a developed plot includes facilities like water, electricity, and roads, it can come under GST.
Can a builder charge 12% GST?
- Till 2019, the builder could claim ITC and charge 12% GST. But with the updated new rates without ITC, the process has become simple for the home buyers.
Is GST applicable on sale deeds?
- No, it's not applicable to the purchase of any land.
What are the types of GST?
- There are four types that include IGST, SGST, CGST & UTGST.
