GST on Real Estate in India: Applicability Explained
- 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.
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.
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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 |
Property Type
GST Rate
Property Type
GST Rate
Property Type
GST Rate
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.
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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 |
Property Type
GST Applicability
Property Type
GST Applicability
Property Type
GST Applicability
Property Type
GST Applicability
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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 |
Property Type
GST Rate
Input Tax Credit
Property Type
GST Rate
Input Tax Credit
Property Type
GST Rate
Input Tax Credit
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.
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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 .
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GST on Real Estate Sector Components
| Component | GST Rate |
|---|---|
| Cement | 28% |
| Steel | 18% |
| Tiles, Fixtures | 18% – 28% |
| Works Contract Services | 18% |
Component
GST Rate
Component
GST Rate
Component
GST Rate
Component
GST Rate
Though ITC is blocked for residential projects, developers still pay GST on materials and services, increasing construction cost.
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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.
