BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.
Buying a new home or investing in a property under construction? One major cost factor you can’t ignore is GST on builder and construction services. Whether it’s a residential flat, villa, or commercial unit, understanding how GSTapplies to builders and developers is key to planning your finances and avoiding hidden costs.
Yes, GST (Goods and Services Tax) is applicable when you buy a property under construction from a builder or developer. However, if the property is completed and has a Completion Certificate (CC), then no GST is applicable.
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| Type of Property | GST Rate | Input Tax Credit (ITC) | Remarks |
|---|---|---|---|
| Affordable housing project | 1% | Not allowed | Unit cost should be ≤ ₹45 lakhs |
| Non-affordable housing | 5% | Not allowed | No ITC under this scheme |
| Commercial property (under construction) | 12% | Allowed | ITC allowed for commercial spaces |
| Ready-to-move property (with CC) | 0% | Not applicable | GST not applicable post CC issuance |
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The buyer pays GST to the builder, which is included in the property agreement. The builder then remits this amount to the government. This applies only to new properties sold before completion.
If the builder completes the construction and obtains a Completion Certificate before the sale, the unit is considered ready-to-move-in, and no GST is charged. This makes ready properties more attractive to buyers looking to save on taxes.
| Input | GST Rate |
|---|---|
| Cement | 28% |
| Steel and iron | 18% |
| Paints and hardware | 18% |
| Sand, bricks, and stone (non-branded) | 5% / 0% |
| Labour contractor services | 18% |
Even though builders cannot claim ITC under the 1% or 5% scheme for residential property, they still pay GST on raw materials and subcontractor services.
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| Service Type | GST Rate |
|---|---|
| Developer constructing on own land | 1% / 5% |
| Joint development agreement with landowner | 5% (residential) / 12% (commercial) |
| Redevelopment or re-construction projects | Varies |
The gst on builder and developer also applies to joint development models, where the builder shares revenue or property units with landowners. Knowing the GST regime for builders is essential for both property buyers and developers. While GST has streamlined taxation in real estate, it still adds a significant cost—unless you’re buying a ready-to-move property. Always check project status and GST applicability before signing the dotted line.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.