--- title: "New GST for Real Estate 2026: 5% / 18% Rate on Property" description: "New GST rate on real estate in 2026 is 5% to 18% based on property type and construction status. Busy ensures accurate GST billing on every sale and purchase." canonical: "https://busy.in/gst-rates/real-estate/" author: "Hitesh Aggarwal" published: "2025-05-05T09:41:19.000Z" category: "GST Rates" --- - GST on real estate depends on the type of property. Affordable residential properties attract **1% GST**, other residential properties attract **5% GST**, and commercial properties generally attract **12% GST with ITC**. - GST applies to under-construction properties but not to completed properties with an Occupancy Certificate. - Input Tax Credit (ITC) is not available for residential projects under the new GST rates but is available for eligible commercial properties taxed at 12%. - Developers must accurately classify properties and manage invoicing and GST filings to remain compliant. - GST on construction materials like cement and steel applies separately and can increase project costs. # 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**](https://busy.in/hsn/) , and how GST impacts the industry at large. ## New GST Rate on Real Estate The revised GST rates applicable from **22 September 2025** are provided below for real estate properties (no compensation cess). | Property Type | GST Rate | | --- | --- | | Affordable Housing | **1%** | | Other Residential Properties | **5%** | | Commercial Properties (Shops/Offices) | **12% with ITC** | **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**](https://busy.in/accounting-software/gst-accounting/) ## 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**](https://busy.in/accounting-software/) Live Demo Available Today ## Register Commercial Properties as Fixed Assets for Depreciation Trusted by 6,00,000+ Users 4.6 Google Rating \* No credit card required ## 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**](https://busy.in/accounting-software/gst-accounting/) ## 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**](https://busy.in/gst/gst-returns/) . **Get a Free Demo –** [**Best Billing and Invoicing Software**](https://busy.in/accounting-software/invoicing-and-gst-billing/) ## 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**](https://busy.in/accounting-software/inventory-management/) ## 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**](https://busy.in/gst/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. ## About the author **Hitesh Aggarwal** 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. ## Related articles - [New GST on Skincare Products: Rate, Branding & Retail Pricing](https://busy.in/gst-rates/skincare-products/) - [New GST on Industrial Machinery: Slabs, ITC & MSME Effect](https://busy.in/gst-rates/industrial-machinery/) - [New GST on Restaurant Meals: Dine-in, Takeaway & Delivery Compared](https://busy.in/gst-rates/restaurant-meals/) - [New GST on Kitchen Utensils: What’s Taxed and What’s Not?](https://busy.in/gst-rates/kitchen-utensils/) - [New GST on Online Education: Rate, Exemptions & EdTech Impact](https://busy.in/gst-rates/online-education/) - [New GST on Packaging Materials: Tax Implication Across Industries](https://busy.in/gst-rates/packaging-materials/) - [New GST on Digital Marketing Services: Tax Rates & Input Credit Explained](https://busy.in/gst-rates/digital-marketing-services/) - [New GST on Pesticides: Rates, Agri-Exemptions & Sector Impact](https://busy.in/gst-rates/pesticides/) - [New GST on Butter: From Dairy to Dining – What You Pay](https://busy.in/gst-rates/butter/) - [GST on Honey: Rate, Applicability & Industry Outlook](https://busy.in/gst-rates/honey/)