New GST on Builder and Construction Services: What Buyers Should Know
- GST applies to under-construction properties where consideration is received before the Completion Certificate or first occupation, whichever is earlier.
- Residential apartments under construction generally continue to attract 1% GST for affordable housing and 5% GST for other residential housing, without Input Tax Credit (ITC). These rates were already applicable before 22 September 2025.
- Commercial apartments in a Residential Real Estate Project (RREP) generally attract 5% GST without ITC, while other eligible commercial construction generally attracts an effective 12% GST with ITC.
- GST does not apply to the sale of completed or ready-to-move properties where the entire consideration is received after the Completion Certificate or first occupation, whichever is earlier.
- GST on cement was reduced from 28% to 18% from 22 September 2025, while steel generally attracts 18% GST. Builders paying 1% or 5% GST on residential apartments cannot claim ITC under these schemes.
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.
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Is GST Applicable on Builder Services?
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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GST Rate on Under-Construction Property in India
GST rates on under-construction residential properties continue to depend on the type of property and project. The 1% and 5% residential rates were already applicable before 22 September 2025 and remain unchanged.
GST on Under-Construction Property
| Type of Property | Current GST Rate | Input Tax Credit (ITC) | Remarks |
|---|---|---|---|
| Affordable residential housing | 1% | Not allowed | Subject to prescribed affordable-housing conditions, including value and carpet-area limits |
| Other residential housing | 5% | Not allowed | Applicable to non-affordable residential apartments |
| Commercial apartments in an RREP | 5% | Not allowed | Applies where commercial carpet area does not exceed 15% of the total carpet area |
| Other commercial property under construction | 12% effective rate | Allowed | Generally applicable to commercial construction outside the 5% RREP category |
| Completed or ready-to-move property | GST not applicable | Not applicable | GST does not apply where the entire consideration is received after Completion Certificate or first occupation, whichever is earlier |
Type of Property
Current GST Rate
Input Tax Credit (ITC)
Remarks
Type of Property
Current GST Rate
Input Tax Credit (ITC)
Remarks
Type of Property
Current GST Rate
Input Tax Credit (ITC)
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Type of Property
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GST on Under-Construction Property
The GST rates on under-construction residential properties remained unchanged from 22 September 2025. Affordable housing continues at 1% GST, while other residential housing generally attracts 5% GST, both without Input Tax Credit (ITC).
| Type of Property | GST Rate | Input Tax Credit (ITC) | Remarks |
|---|---|---|---|
| Affordable housing project | 1% | Not allowed | Subject to prescribed affordable-housing conditions |
| Non-affordable residential housing | 5% | Not allowed | No ITC under this scheme |
| Commercial apartments in an RREP | 5% | Not allowed | Applicable where prescribed RREP conditions are met |
| Other commercial property under construction | 12% | Allowed | ITC available |
| Ready-to-move property | GST not applicable | Not applicable | No GST where the entire consideration is received after Completion Certificate or first occupation, whichever is earlier |
Type of Property
GST Rate
Input Tax Credit (ITC)
Remarks
Type of Property
GST Rate
Input Tax Credit (ITC)
Remarks
Type of Property
GST Rate
Input Tax Credit (ITC)
Remarks
Type of Property
GST Rate
Input Tax Credit (ITC)
Remarks
Type of Property
GST Rate
Input Tax Credit (ITC)
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Who Pays GST: Builder or Buyer?
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.
No GST on Ready-to-Move Flats
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. GST also does not apply where the entire consideration is received after first occupation, whichever is earlier.
GST for Builders on Raw Materials & Services
| Input | GST Rate |
|---|---|
| Cement | 18% |
| Steel and iron | 18% |
| Paints and hardware | Generally 18% |
| Natural sand | 5% |
| Sand lime bricks | 5% |
| Other building bricks | 6% without ITC / 12% with ITC |
| Rough building stone | Generally 5% |
| Worked or processed stone | Generally 18% |
| Labour contractor services | Generally 18%, subject to applicable exemptions |
Input
GST Rate
Input
GST Rate
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GST Rate
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GST Rate
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GST Rate
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GST Rate
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GST Rate
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Even though builders cannot claim ITC under the 1% or 5% GST scheme for residential property, they still pay applicable GST on raw materials and subcontractor services.
GST on Builder and Developer Services
| Service Type | GST Rate |
|---|---|
| Developer constructing residential property on own land | 1% for affordable housing / 5% for other residential housing |
| Joint development agreement with landowner | 1% or 5% for residential apartments; 5% or 12% for commercial apartments, as applicable |
| Redevelopment or re-construction projects | Rate depends on the type of property and project |
Service Type
GST Rate
Service Type
GST Rate
Service Type
GST Rate
Builders generally cannot claim Input Tax Credit (ITC) under the 1% or 5% residential property scheme.
Conclusion
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.
