May 23, 2026
7 mins read
GST on real estate explains when tax applies to property deals in India. It mostly affects homes that are still under construction. Ready properties follow separate rules. The GST rate depends on the type of property. Tax is calculated on the agreement value. Some charges are kept out of GST. These rules help people understand how property tax works.
GST applies to some property deals in India. It mainly affects homes that are still being built. Ready-to-move homes are treated differently under tax rules.
The GST rate depends on the type of property. Affordable housing follows one rate. Other residential properties follow another. Some charges linked to a property sale may also attract GST.
GST is calculated on the agreement value of the property. Certain amounts may not be included. These rules help explain how GST works in real estate transactions.
GST on real estate explains how tax applies to property transactions in India. It mainly affects properties that are still under construction. Completed or ready-to-move homes usually do not attract GST under current tax rules.
GST rates differ based on property type. Affordable housing and other residential properties follow separate slabs. Commercial properties also fall under GST rules. The tax is charged by the developer during the sale process.
GST is calculated on the agreement value of the property. The value of land is excluded while computing tax. This method helps avoid taxing land separately and keeps GST limited to construction services.
Read More: How to Calculate your GST Online
The following is the way GST is applied in real estate:
Property Type | GST Rate | GST Applies When |
Under-construction affordable housing | 1% | Property is still under construction |
Under-construction non-affordable housing | 5% | Property is still under construction |
Ready-to-move residential property | Nil | Completion certificate is issued |
Sale of land or plot | Nil | Only land is sold |
Commercial property under construction | 5% | Property is still under construction |
Post GST advancements:
The construction material input tax credit reduces costs, benefiting buyers and developers.
A more transparent tax structure is beneficial and enhances customer trust.
Source: Livemint
The introduction of the new GST rates in 2019 included significant advantages to consumers of affordable housing. Previously, the GST was 8 per cent, which accounted for two-thirds of the property price (excluding the land), thereby increasing the cost of homes.
Yet, the value of post-2019 restructuring reduced the rate to 1% of the total property value, excluding the input tax credit. This shift greatly minimised the effective cost per square foot, and the affordability of homes increased, which has increased demand in the segment.
Metric | Before 2019 | After 2019 |
GST Rate | 8% on ⅔ construction cost | 1% of the total value |
Effective Cost (per square ft) | ₹280 | ₹35 |
Input Tax Credit (ITC) | Applicable | Not applicable |
Source: Livemint
In the case of under-construction, non-affordable, or luxury houses, the GST rate was lowered to 5%, with no input tax credit (ITC). This makes luxury homes a bit more affordable, but it also removes the incentive of tax offsets. Nevertheless, the exemptions from GST still apply to owners of ready-to-move-in and resale properties, allowing second-hand consumers to benefit financially.
Source: Livemint
Normal abatement: 33% land, 67% building.
GST on the value of construction would reduce cascading taxes and lead to a more accurate addition of costs.
ITC on materials benefits builders as the cost of construction reduces, and these savings are typically passed on to buyers.
The Goods and Services Tax (GST) does not provide coverage for registration fees, as well as stamp duty on property transfers. These are the charges levied at the state level, and the purchaser must bear these additional costs.
The general registration charges are between 0.5% and 1% of the market value of the property, while stamp duty ranges from 5% to 8% according to the state and nature of the property. These fees are to be charged on both under-construction and completed properties, which increases the overall transaction cost. These statutory expenses are mandatory and should be factored into the budget by the buyers, as they are obligatory.
Source: ClearTax
Calculation formula:
GST payable = (Value of property – Abatement of 33% on land) × GST rate
For a ₹1,000 m under-construction sale:
After abatement: taxable value ₹670
GST @5% = ₹33.50
GST is divided equally between CGST and SGST under India's dual GST regime.
Source: Livemint
Ready-to-move-in and resale property
Land purchases
Joint development agreements might be subject to GST if being sold pre-completion, recently upheld by the Patna HC (May 2025).
Source: Economic Times
Yes, ITC is permitted for builders in the old GST regime (prior to April 2019). But with the new lower rate scheme (after April 2019), ITC is not permitted.
GST is not payable on the resale of residential property. It is considered a sale of immovable property and is exempt.
GST is charged if the developer markets the property prior to completion under a joint development arrangement. No GST is charged if sold after completion.
There are no GST exemptions for first-time homebuyers, but low-cost housing has a lower GST at 1% (excluding ITC), which is advantageous to such buyers.
If a property is cancelled upon booking and the builder returns the money, the GST amount paid is also returned, if the cancellation and refund both take place in the same financial year.
GST applies only if the property is sold before it receives a Completion Certificate or Occupancy Certificate. The GST rate is 1% for affordable housing and 5% for non-affordable residential housing. These rates are charged without Input Tax Credit.
Yes. Affordable housing attracts a concessional GST rate of 1% on under-construction properties. To qualify, the home price must be up to ₹45 lakh, and the carpet area must be within the prescribed limits for metro or non-metro locations.
Yes, but the concessional GST rate applies only if the commercial property is under construction and sold before obtaining the Completion Certificate or Occupancy Certificate. In that case, GST is 12%. If it is ready to move in with a valid certificate, GST is not applicable.
No. The sale of land is not treated as a supply under GST, so GST does not apply. But if the transaction includes development services, such as roads or drainage, GST may apply to the development portion, not the land value.
When a completion certificate or occupancy certificate is issued for a property that is ready to occupy, GST does not apply to these transactions, as they are classified as sales of immovable property under the GST law.
GST on commercial real estate depends on the type of transaction. Under-construction or newly built commercial property is taxed at 12%, whereas renting/leasing commercial property is taxed at 18%.
GST is not levied on sale transactions involving land. Land transactions do not fall under the definition of a supply of goods and/or services as defined in the GST Act.
The GST rate applicable for affordable housing projects is 1%, with no input tax credit arising. The appropriate 1% GST rate will apply only if specific requirements regarding carpet area and property value are met.
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