GST on Construction Services & Real Estate 2025

Last updated: 3 June 2026

Quick Answer: Under construction flats and properties attract 5% GST (no ITC) for both affordable and regular residential projects (effective April 2019). Completed / ready-to-move flats with OC or CC are exempt from GST (0%). Commercial properties under construction attract 12% GST.

GST on ready-to-move flats — if Occupancy Certificate (OC) or Completion Certificate (CC) is obtained before the date of sale, no GST is payable by the buyer.

GST Rate Chart for Construction & Real Estate

The GST Council overhauled real-estate GST rates in early 2019. The new rates applied from 1 April 2019 and removed the ITC benefit from developers. Here is a consolidated rate table:

Type of Property / Transaction	GST Rate	ITC Available?	Remarks
Affordable residential housing (under construction)	1% effective*	No	Carpet ≤60 sqm non-metro / ≤90 sqm metro; value ≤₹45L
Other residential housing (under construction)	5%	No	Applicable from 1 April 2019
Residential housing — before April 2019	12%	Yes	Old scheme, no longer available for new projects
Ready-to-move / completed flat (OC/CC obtained)	0% (exempt)	N/A	Sale of immovable property — outside GST scope
Commercial property under construction	12%	Yes	Shops, offices, godowns, etc.
Commercial completed property (OC/CC obtained)	0% (exempt)	N/A	Same as residential — outside GST scope
Works contract — residential (non-affordable)	12%	Partial	Contractor charges GST on labour + materials
Works contract — commercial / industrial	18%	Yes	Higher rate for non-residential projects
Joint Development Agreement (JDA) — developer's share	5% or 1%	No	On proportionate value of developer's flats

*Effective rate after the mandatory 1/3 deduction for land value per Notification No. 11/2017-CT(R).

What is "Affordable Housing" for GST Purposes?

The definition of affordable housing under GST is specific and differs from other government schemes. A residential unit qualifies as affordable housing if both the following conditions are satisfied:

Criteria	Metro Cities*	Non-Metro Cities
Carpet area	≤ 90 sqm	≤ 60 sqm
Value cap	≤ ₹45 lakh	≤ ₹45 lakh

*Metro cities: Mumbai, Delhi NCR, Bengaluru, Chennai, Hyderabad, Kolkata, Ahmedabad.

GST on Under Construction Flat — Key Rules

When you buy a flat directly from a builder and construction is still in progress, GST applies on the consideration paid. Key rules:

GST is charged on the total consideration received before or after the issue of completion certificate (proportionate to stage of construction).
The developer cannot claim ITC on cement, steel, tiles, labour, or other inputs used under the new 5%/1% scheme.
Maintenance charges collected by the builder's entity (RWA/society) separately are subject to 18% GST if monthly charges exceed ₹7,500 per flat.
Preferential location charges (PLC), floor rise charges, car parking, club membership — all form part of the taxable value and attract the same GST rate as the flat.
A developer who had opted for old rates (12% with ITC) for ongoing projects before 31 March 2019 could continue with those rates for those projects.

GST on Works Contract in Construction

A works contract is a composite supply involving both goods and services (supply of material + labour for construction). Under GST:

Works Contract Type	GST Rate	Example
Residential construction (affordable)	12%	Contractor building affordable housing units
Residential construction (other)	12%	Contractor building regular flats / villas
Commercial / industrial construction	18%	Offices, factories, warehouses
Government / railways / defence	12%	Roads, bridges, dams (notified works)
Repair / renovation (residential)	18%	Home renovation by a contractor

Frequently Asked Questions

What is the GST rate on an under construction flat in India?

Under construction flats attract 5% GST (without ITC) for both affordable and regular residential properties, as per the revised rates effective 1 April 2019. Before April 2019, the rate was 12% with ITC benefit to the developer.

Is there any GST on a ready-to-move flat?

No. If the builder has obtained a Completion Certificate (CC) or Occupancy Certificate (OC) before the date of sale, the transaction is treated as a sale of immovable property and is exempt from GST. GST applies only when construction is still in progress at the time of sale.

What is the GST rate on affordable housing in 2025?

Affordable housing units under construction are taxed at 1% GST (effective rate after abatement for land value) — but the commonly cited practical rate is 5% on the construction value net of land. The CBIC notification defines affordable housing as carpet area ≤ 60 sqm in non-metros or ≤ 90 sqm in metros with value ≤ ₹45 lakh.

Can a developer or builder claim Input Tax Credit (ITC) on construction materials?

No. From 1 April 2019, developers who opted for the new GST rates of 5%/1% (without ITC) cannot claim ITC on inputs such as cement, steel, paint, etc. Under the old scheme (12% with ITC), ITC was available, but that option is no longer available for new projects.

What is the GST rate on commercial property under construction?

Commercial properties under construction attract 12% GST. Once the building is complete and the OC/CC is issued, subsequent sale is exempt from GST. Works contract services for commercial construction attract 12%, while industrial or general construction works contracts attract 18%.

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