Is GST applicable on ready-to-move-in flats?

No, GST is not applicable if the builder has received the Occupancy Certificate.

Can builders claim GST input credit?

Only for commercial projects or residential projects under the old regime.

Does GST apply to resale property?

No. Resale flats or independent homes sold by individuals are not covered under GST.

How is gst on real estate sector impacting home prices?

While GST simplified taxation, blocked ITC has increased developers' costs, which may reflect in pricing.

GST on Real Estate in India: Applicability Explained

The Indian real estate sector has undergone major tax reforms with the introduction of the Goods and Services Tax (GST). Whether you’re buying a flat, constructing a building, or leasing commercial property, it’s crucial to understand how the gst on real estate works. In this blog, we’ll break down the gst rate on real estate, exemptions, HSN codes , and how GST impacts the industry at large.

Book A Demo

Phone Number*

Country code

Email ID*

City*

GST Rates

New GST Rate on Real Estate

The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for Real Estate (no compensation cess).

Property Type	GST Rate
Affordable Housing	1%
Other Residential Properties	5%
Commercial Properties (Shops/Offices)	5%

Note: “Affordable housing” refers to homes with carpet area up to 60 sq. meters in metro cities (90 sq. meters in non-metros) and priced below ₹45 lakhs.

Get a Free Trial – Best GST Accounting Software For Small Business

GST Applicability on Real Estate Transactions

The gst for real estate depends on whether the property is:

Property Type	GST Applicability
Under-construction residential property	Yes – GST applicable
Ready-to-move-in property (OC issued)	No – GST exempt
Commercial property (office, shop)	Yes – GST applicable
Land purchase or resale property	No – Outside GST scope

Get a Free Trial – Best Accounting Software For Small Business

Old GST Rate on Real Estate

(Old GST Rates – Applicable Until 21st September)

The real estate gst rate was revised in April 2019 to make housing more affordable:

Property Type	GST Rate	Input Tax Credit
Affordable Housing	1%	No
Other Residential Properties	5%	No
Commercial Properties (Shops/Offices)	12%	Yes

Note: “Affordable housing” refers to homes with carpet area up to 60 sq. meters in metro cities (90 sq. meters in non-metros) and priced below ₹45 lakhs.

Get a Free Trial – Best GST Accounting Software For Small Business

Input Tax Credit (ITC) Rules

ITC is not allowed for residential real estate projects under the new GST structure (1% and 5% slabs).
ITC is allowed for commercial real estate (e.g., office spaces, malls) taxed at 12%.
Developers must reverse ITC if switching from old to new GST rates.

GST Impact on Buyers and Developers

For Homebuyers:

Pay 1% or 5% GST on under-construction properties.
No GST on completed or resale flats with Occupancy Certificate (OC).

For Developers:

Need to classify projects accurately under affordable or non-affordable categories.
Must segregate commercial and residential components.
Maintain compliance with invoicing, ITC tracking, and GST filings .

Get a Free Demo – Best Billing and Invoicing Software

GST on Real Estate Sector Components

Component	GST Rate
Cement	28%
Steel	18%
Tiles, Fixtures	18% – 28%
Works Contract Services	18%

Though ITC is blocked for residential projects, developers still pay GST on materials and services, increasing construction cost.

Explore a Free Demo of – Best Inventory Management Software For Small Business

Final Thoughts

The gst on real estate in India is designed to make taxation more transparent for buyers and builders. While ready-to-move-in homes are exempt, under-construction properties attract either 1% or 5% GST. Developers of commercial spaces continue to benefit from input tax credit under the gst on real estate sector. Knowing the rules ensures you’re not caught off guard when making your next property decision.

Hitesh Aggarwal

Chartered Accountant

MRN No.: 529770

City: Delhi

As a Chartered Accountant with over 12 years of experience, I am not only skilled in my profession but also passionate about writing. I specialize in producing insightful content on topics like GST, accounts payable, and income tax, confidently delivering valuable information that engages and informs my audience.

Frequently Asked Questions

Is GST applicable on ready-to-move-in flats?

No, GST is not applicable if the builder has received the Occupancy Certificate.
What is the gst rate on real estate for commercial properties?

12% GST with input tax credit.
Can builders claim GST input credit?

Only for commercial projects or residential projects under the old regime.
Does GST apply to resale property?

No. Resale flats or independent homes sold by individuals are not covered under GST.
How is gst on real estate sector impacting home prices?

While GST simplified taxation, blocked ITC has increased developers' costs, which may reflect in pricing.

View all FAQs