New GST for Flat Purchase in India: Rates, Rules & Buyer Insights
- GST applies only to under-construction flats and not to ready-to-move-in or resale flats.
- The GST rate is 1% for affordable housing and 5% for other residential properties, with no Input Tax Credit (ITC) allowed.
- Commercial properties are taxed at 12% GST, and ITC is allowed for these.
- Affordable housing is defined as having a carpet area up to 60 sq. meters in metros and 90 sq. meters in non-metros, with a price not exceeding ₹45 lakhs.
- No GST is payable on resale flats or ready-to-move-in homes with an Occupancy Certificate, but stamp duty and registration charges still apply.
Buying a flat or apartment is one of the biggest investments in a person’s life. Whether it’s for personal use or investment, understanding the Goods and Services Tax (GST) on flat purchases is essential. While GST has simplified real estate taxation, many buyers still have questions about when it applies, how much is charged, and whether Input Tax Credit (ITC) is available.
This blog provides a complete guide to GST for flat purchases in India, including tax rates, exemptions, and special cases.
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GST on Flat Purchase: When Does It Apply?
GST applies only to under-construction flats and properties being sold by a builder. If you’re buying a ready-to-move-in flat, where the completion certificate has been issued, GST does not apply.
| Type of Property | GST Applicable? |
|---|---|
| Under-construction property | Yes |
| Ready-to-move-in (with Occupancy Certificate) | No |
| Resale flat (individual to individual) | No |
Type of Property
GST Applicable?
Type of Property
GST Applicable?
Type of Property
GST Applicable?
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New GST Rates on Under-Construction Flats
| Property Type | GST Rate | ITC Allowed? |
|---|---|---|
| Affordable housing (as defined below) | 1% | No |
| Other residential properties | 5% | No |
| Commercial property (shops, offices) | 12% | Yes |
Property Type
GST Rate
ITC Allowed?
Property Type
GST Rate
ITC Allowed?
Property Type
GST Rate
ITC Allowed?
Old GST Rates on Under-Construction Flats
(Old GST Rates – Applicable Until 21st September)
In April 2019, the government revised GST rates on real estate. Here are the latest rates:
| Property Type | GST Rate | ITC Allowed? |
|---|---|---|
| Affordable housing (as defined below) | 1% | No |
| Other residential properties | 5% | No |
| Commercial property (shops, offices) | 12% | Yes |
Property Type
GST Rate
ITC Allowed?
Property Type
GST Rate
ITC Allowed?
Property Type
GST Rate
ITC Allowed?
Affordable Housing Definition:
- Carpet area up to 60 sq. meters in metro cities
- Carpet area up to 90 sq. meters in non-metros
- Price not exceeding ₹45 lakhs
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HSN Code for Real Estate Services
Real estate services fall under HSN Code 9954 , which is used for construction of residential and commercial buildings.
| Service Type | HSN Code | GST Rate |
|---|---|---|
| Construction of residential flats | 995411 | 1% or 5% |
| Construction of commercial property | 995412 | 12% |
Service Type
HSN Code
GST Rate
Service Type
HSN Code
GST Rate
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GST Calculation Example for Flats
Let’s say you buy an under-construction flat for ₹50 lakhs (non-affordable segment):
- GST @5% = ₹2,50,000
- Total Payable = ₹52,50,000
If the flat falls under the affordable category:
- GST @1% = ₹50,000
- Total Payable = ₹50,50,000
Remember: Stamp duty, registration charges, and other state levies are separate and not covered under GST.
Input Tax Credit (ITC) in Real Estate
Under the new GST regime (post-April 2019):
- No ITC is allowed for homebuyers
- Builders also cannot claim ITC on inputs like cement, steel, labor, etc., under the 5% and 1% rates
- ITC is allowed only for commercial construction at 12% GST
This ensures builders don’t pass on tax benefits to themselves, keeping home prices fair for consumers.
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GST on Resale Flats or Ready Possession Homes
If you are buying:
- From an individual (resale flat)
- Or from a builder but the flat has OC issued
No GST is payable. You’ll still pay stamp duty and registration charges as per your state rules.
Final Thoughts
GST has brought uniformity in flat pricing across states, but it’s crucial to know whether your property is eligible for GST (Goods and Services Tax) , what rate applies, and how it affects your final cost. While GST does not apply to completed or resale flats, under-construction homes are taxed—1% for affordable and 5% for others—without ITC. Make sure to get all invoices and certificates from your builder to stay tax-compliant and informed.
