GST on Real Estate in India: Applicability Explained
- The real estate GST rate depends on the type of property and applicable conditions.
- Affordable residential properties generally attract 1% GST, while other residential properties generally attract 5% GST.
- Commercial properties follow GST treatment based on their applicable classification and provisions.
- GST generally applies to under-construction properties where completion certificate or first occupation has not been issued. Completed properties after completion certificate are generally outside GST scope.
- Input Tax Credit availability depends on the type of property, applicable GST scheme and other GST conditions.
- Developers and builders should correctly classify properties, issue GST-compliant invoices and maintain proper records for compliance.
- GST on construction materials such as cement, steel and other inputs applies separately and may impact overall 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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GST Rate on Real Estate in India
The applicable GST rates for real estate depend on the type of property, applicable scheme and GST conditions.
| Property Type | GST Rate From 22 Sep 2025 | Rate Before 22 Sep 2025 |
|---|---|---|
| Affordable residential properties (under-construction) | 1% | 1% |
| Other residential properties (under-construction) | 5% | 5% |
| Commercial properties (shops/offices) | Applicable GST rate based on classification and applicable provisions | 12% with ITC (for applicable commercial properties) |
Property Type
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Property Type
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Property Type
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Note: Affordable housing generally refers to residential units meeting prescribed conditions relating to carpet area and value. GST generally applies to under-construction properties where completion certificate or first occupation has not been issued. Completed properties after completion certificate are generally outside GST scope.
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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
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GST Applicability
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GST Applicability
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Input Tax Credit (ITC) Rules
- Input Tax Credit is generally not available for residential real estate projects taxed under the 1% and 5% without ITC schemes.
- ITC availability for commercial real estate depends on the applicable GST scheme, rate and conditions.
- Developers must comply with applicable ITC reversal, calculation and documentation requirements based on project classification and GST provisions.
GST Impact on Buyers and Developers
For Homebuyers:
- Pay applicable GST on under-construction properties, including 1% for affordable residential properties and 5% for other residential properties, subject to GST conditions.
- No GST is generally applicable on completed or resale properties where completion certificate or first occupation has been issued.
For Developers:
- Classify projects accurately under applicable residential or commercial categories.
- Maintain proper records for project-wise GST treatment and ITC compliance.
- Ensure correct invoicing, ITC tracking and GST return filing.
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GST on Real Estate Sector Components
| Component | GST Rate From 22 Sep 2025 | Rate Before 22 Sep 2025 |
|---|---|---|
| Cement | 18% | 28% |
| Steel and iron products | 18% | 18% |
| Tiles | Applicable GST rate based on tile type and classification | Applicable GST rate based on tile type and classification |
| Sanitary ware and fixtures | Applicable GST rate based on product classification | Applicable GST rate based on product classification |
| Works Contract Services | 18% | 18% |
Component
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Component
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Component
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Component
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Component
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Note: GST rates on construction materials depend on the applicable HSN classification. The GST reduction on cement from 28% to 18% may impact construction costs for real estate projects.
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Final Thoughts
GST on real estate in India depends on the type of property, construction status and applicable GST provisions. Under-construction residential properties generally attract 1% GST for affordable housing and 5% GST for other residential properties, while completed properties after completion certificate are generally outside GST scope.
Developers should maintain accurate classification, invoicing and GST compliance records. Input Tax Credit availability depends on the applicable GST scheme and conditions for each project.
