Table of Contents
What is GST on Real Estate?
GST (Goods and Services Tax) applies mainly on under-construction properties as a supply of service under Section 7 of CGST Act, 2017.
No GST is charged on:
- Ready-to-move-in homes with a completion certificate (CC)
- Resale properties and land
GST is applicable only if the sale is made before CC is issued.
GST Rates on Property in 2025 (As per Notification No. 03/2019-CT (Rate))
| Property Type | GST Rate | Input Tax Credit (ITC) | Relevant Section / Rule |
|---|---|---|---|
| Affordable Housing | 1% | Not allowed | CGST Rate Notification + Rule 42 |
| Non-Affordable Housing | 5% | Not allowed | CGST Rate Notification + Rule 42 |
| Commercial Property (under construction) | 12% | Allowed | Section 16 – ITC + Notification |
| Ready-to-move-in property (with CC) | No GST | Not applicable | Not a supply – Schedule III |
| Land purchase only | No GST | Not applicable | Schedule III – CGST Act, 2017 |
- Completion Certificate (CC) means property is ready and not liable for GST.
What is Affordable Housing in GST?
As per CBIC guidelines, affordable housing means:
- Metro cities – Carpet area ≤ 60 sq. meters and price ≤ ₹45 lakh
- Non-metro cities – Carpet area ≤ 90 sq. meters and price ≤ ₹45 lakh
Important Conditions for 1% GST Rate
- The builder/developer should not claim ITC.
- The project must be classified as an affordable housing project.
- The house should be sold before completion (under construction stage).
- Completed property (after OC) has no GST applicable
If your home qualifies, GST is only 1% without ITC.
Legal Reference: CBIC Notification No. 03/2019 dated 29.03.2019
GST on Ready-to-Move vs Under-Construction
| Type of Property | GST? | Explanation | Section |
|---|---|---|---|
| Under-construction flat | Yes – 1%, 5%, or 12% | Treated as supply of service | Section 7 – CGST Act |
| Ready-to-move-in with CC | No | Not considered supply under GST | Schedule III – Entry 5(b) |
| Plot of land | No | Sale of land excluded from GST scope | Schedule III – Entry 5 |
GST Tips for Home Buyers
- Ask builder if Completion Certificate (CC) is received
- Confirm if GST is included in total price or not
- Buy ready property to save GST
- Check if your home falls under affordable housing for 1% rate
Example:
You buy a flat in Lucknow for ₹40 lakh with 85 sq. meter carpet area.
- It’s in a non-metro city and qualifies as affordable housing
- GST = 1% = ₹40,000
- No Input Tax Credit (ITC) allowed
GST Rules for Builders & Developers
| Compliance | Requirement | Applicable Section / Rule |
|---|---|---|
| GST Registration | Mandatory if turnover > ₹20 lakh | Section 22 – CGST Act, 2017 |
| GST on flat sold before CC | Yes (1% or 5% rate) | Section 7 – Supply of Service |
| GST on commercial property | 12% with ITC allowed | Section 16 – Input Tax Credit |
| Monthly Return Filing | GSTR-1 & GSTR-3B | Rule 59, 61 of CGST Rules |
Builders under new scheme cannot claim ITC (1% or 5%), as per Notification No. 03/2019.
GST on Renting Property
| Type of Renting | GST Rate | Section / Rule |
|---|---|---|
| Residential use (personal) | No GST | Exempt – Notification No. 12/2017 |
| Residential rented for business use | 18% (RCM) | Section 9(3) – Reverse Charge Mechanism |
| Commercial property on rent | 18% | Schedule II – Supply of Service |
FAQs – GST on Real Estate
Q. Is GST applicable on resale flats?
No, resale property is not a supply under GST. (Schedule III – CGST Act)
Q. Can I claim ITC on GST paid on flat purchase?
No, buyers cannot claim ITC under the 1% or 5% scheme. (Rule 42)
Q. Can builders claim ITC?
Only if they opt for the 12% rate on commercial properties.
Q. Is GST applicable after CC is received?
No. Sale after CC is not taxable under GST.
Useful Links
Suggestion:
Understanding GST on real estate is important for every home buyer, builder, or agent. It directly affects your property cost, tax benefits, and legal compliance.
Need help with GST registration, builder returns, or GST refund?
Visit TaxGiveIndia.com today for expert support!