GST on Real Estate in India 2025: Rates, Rules & What Buyers Must Know
Buying a property in India often comes with GST-related confusion: Is GST applicable? How much? Does it apply to ready-to-move flats? What about rental income? Can the builder claim Input Tax Credit?
- GST applies only to under-construction property — ready-to-move (with Occupancy Certificate) and resale flats attract no GST.
- Rates are 1% for affordable housing, 5% for other residential, and 12% for commercial — all without builder ITC.
- Affordable housing requires both a carpet area limit (60/90 sq m) and a ₹45 lakh value cap to qualify for the 1% rate.
- Residential rent to individuals is GST-exempt; commercial rent attracts 18% GST; residential rent to a registered business triggers 18% GST under reverse charge.
- Housing society maintenance above ₹7,500/month per flat attracts 18% GST on the full amount, not just the excess.
The rules around GST on real estate are more nuanced than in most sectors — and the April 2019 rate revision created a sharp distinction that still catches many buyers and investors off guard. This guide answers every common question clearly.
What Is the Single Most Important Rule About GST on Property?
Before anything else, understand this dividing line:
| Property Type | GST Applicable? |
|---|---|
| Under-construction property | ✅ Yes — GST applies |
| Ready-to-move / completed property (with OC) | ❌ No — only stamp duty & registration |
| Resale of any completed flat | ❌ No — no GST |
| Land purchase | ❌ No — no GST on land itself |
The Occupancy Certificate (OC) is the dividing line. Once a project receives its OC from the local authority, it's considered "completed" and any subsequent sale is exempt from GST. If you buy before OC is granted, GST applies.
This surprises many buyers who sign agreements during construction but take possession after OC — the key is when the sale agreement is executed and the supply is deemed to have occurred.
GST Rates on Under-Construction Property (Post April 2019)
The GST Council revised real estate rates in April 2019. Current rates:
| Property Type | GST Rate | ITC Available? |
|---|---|---|
| Affordable housing | 1% | No |
| Other residential (non-affordable) | 5% | No |
| Commercial properties | 12% | No |
What Qualifies as "Affordable Housing" for GST?
The 1% rate applies only if the property meets both criteria simultaneously:
| Location | Carpet Area Limit | Value Limit |
|---|---|---|
| Metropolitan cities* | Up to 60 sq metres | Up to ₹45 lakh |
| Non-metropolitan cities/towns | Up to 90 sq metres | Up to ₹45 lakh |
*Metropolitan cities for this purpose: Delhi NCR (Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Mumbai (Mumbai, Thane, Navi Mumbai, Kalyan, Dombivli), Chennai, Kolkata, Bengaluru, Hyderabad, Ahmedabad.
If your flat exceeds either limit — even slightly — it falls into the 5% non-affordable slab.
A ₹42 lakh flat with 65 sq m carpet area in Delhi NCR → fails the carpet area test → 5% GST (not 1%)
A ₹43 lakh flat with 58 sq m carpet area in Delhi → meets both limits → 1% GST
GST Calculation on Under-Construction Property
Because these are effective rates (the government assumes 1/3rd of the value is land, which is not subject to GST), the formula is:
GST = Applicable Rate × Total Consideration Note: Unlike the pre-2019 system, you don't separately deduct land value. The rate itself is the "effective" rate after factoring out the land component.
Example 1 — Affordable housing: Flat value: ₹42 lakh → GST: 1% × ₹42 lakh = ₹42,000
Example 2 — Non-affordable residential: Flat value: ₹85 lakh → GST: 5% × ₹85 lakh = ₹4,25,000
Example 3 — Commercial office space: Office value: ₹1.5 Crore → GST: 12% × ₹1.5 Crore = ₹18,00,000
Use our GST Calculator to quickly compute the exact GST on any property transaction.
GST on Rental Income
Residential Property Rented to Individuals
Completely exempt from GST — no GST applies, regardless of the rent amount or whether the landlord is GST-registered.
Commercial Property Rented to Businesses
If the landlord is GST-registered and rents out commercial premises (shops, offices, warehouses):
- GST Rate: 18%
- Who charges GST: The landlord, on the rent invoice
- ITC: The business tenant can claim ITC on this GST paid as rent
Residential Property Rented to a Business (Reverse Charge Mechanism)
This is the scenario that surprises many: if a GST-registered business rents a residential property (e.g., a company renting an apartment for an employee's accommodation), GST applies under Reverse Charge Mechanism (RCM):
- Rate: 18%
- Who pays: The tenant company pays GST directly to the government
- ITC: Generally not available (residential property for employee accommodation is a blocked credit under Section 17(5))
GST on Maintenance Charges (Housing Societies / RWAs)
Residential Welfare Associations (RWAs) and housing societies charging maintenance fees:
| Monthly Maintenance per Flat | GST Applicable? | Rate |
|---|---|---|
| Up to ₹7,500 | No | 0% |
| Above ₹7,500 | Yes | 18% |
Important: The ₹7,500 threshold is per flat per month. If a society charges ₹8,000/month, GST applies on the full ₹8,000, not just the excess ₹500.
The society must also be GST-registered (mandatory if aggregate receipts exceed ₹20 lakh per year and individual charges exceed ₹7,500/month).
Can Builders Claim ITC on Construction?
Post April 2019: Generally NO.
Under the new rate structure (1%, 5%, 12%), builders opted for lower effective rates but forfeited the right to claim ITC on inputs like: cement, steel, bricks (construction materials), electrical fittings, plumbing materials, construction services subcontracted
Exception: Builders can claim ITC for commercial projects where the entire building's output is taxable (not sold to end users pre-completion). For example, a commercial complex sold to one buyer entirely as a going concern.
Builders who chose the old rates (12% residential / 8% affordable) before April 2019 retain ITC rights for projects opted into the old scheme — but this is now rare and applies only to ongoing legacy projects.
GST on Joint Development Agreements (JDA)
In JDA projects, a landowner gives land to a developer in exchange for a share of constructed units:
For the Developer: Liable to pay GST on the construction services provided to the landowner (reverse charge in some cases), effective when the landowner transfers development rights
For the Landowner: Transfer of development rights to the developer attracts GST (the landowner is considered a supplier of rights), rate: 18% on the value of development rights (complex valuation rules apply)
JDA taxation is highly complex — always consult a GST specialist.
CBIC — GST rate notifications on real estate
GST on Real Estate — Frequently Asked Questions
Is GST applicable on resale of a flat?
No. Resale of a completed property by any seller (individual or company) does not attract GST. Only stamp duty and registration charges apply.
Is GST applicable on the land itself?
No. Land as such is outside GST's purview. Stamp duty and registration charges apply to land transactions.
What if I booked a flat under-construction and it gets OC before registration?
If the sale agreement (allotment letter/booking agreement) was executed during construction, GST applies on the agreed consideration — even if OC comes before the sale deed is registered. The trigger is when the supply is deemed to occur.
Can I get a refund of GST paid on a cancelled flat booking?
Yes — if the builder issues a credit note and refunds the amount, you can claim a refund of the GST paid. The builder must reverse the GST liability in their GSTR-1.
Is GST applicable on home loans?
GST applies to loan processing fees and other charges levied by the bank (18%), but not on the principal or interest component of the home loan itself.
Your GST Real Estate Checklist
Before signing any under-construction property agreement:
Verify builder's GSTIN on gst.gov.in (ensure they're registered)
Calculate the correct GST rate — 1% (affordable) or 5% (non-affordable) or 12% (commercial)
Check if the property qualifies as "affordable housing" — verify carpet area AND value both
Confirm payment schedule — GST is payable on each instalment, not just final payment
Get a GST invoice for every payment — without it, you have no proof of GST paid
Check OC status before registration — if OC is issued, confirm whether supply was made pre-OC
Conclusion
The key to navigating GST on real estate:
- Under-construction = GST applies (1%, 5%, or 12% depending on type)
- Ready-to-move with OC = No GST (stamp duty only)
- Resale = No GST, ever
- Rental income from residential to individuals = No GST
- Rental income from commercial property = 18% GST
- RWA maintenance above ₹7,500/month = 18% GST
Always ask your builder for a proper GST invoice and verify their GSTIN. Use our GST Calculator to compute the GST amount on your property transaction before signing.
Related: What Is GST India · Input Tax Credit Under GST · Reverse Charge Mechanism GST