GST on Property Purchase — Rates, Exemptions & ITC Rules

Updated: 3 June 2026 | CGST Act, 2017 | Notification 11/2017-CT(Rate) as amended

GST on property purchase: 5% on under-construction residential flats (without ITC); 1% on affordable housing under construction; 0% (nil) on completed properties where Occupancy Certificate (OC) has been issued. Land component (1/3rd of total value) is excluded from GST. Stamp duty and registration charges are not GST and are paid to the state government separately.

0% GST

Ready-to-move flats with Occupancy Certificate attract ZERO GST.
If the builder has received OC/CC before or at the time of sale, the transaction is a sale of immovable property — not a service — and falls completely outside the GST net. Only stamp duty and registration apply.

GST Rate on Property Purchase — Complete Summary

Property Type	Status	GST Rate	ITC for Builder?	ITC for Buyer?
Affordable Residential	Under construction (no OC)	1% (effective)	No	No
Other Residential	Under construction (no OC)	5% (effective)	No	No
Commercial Property	Under construction (no OC)	12% (with ITC) — pre-Apr 2019 rates still apply for commercial	Yes	No (for personal)
Ready-to-Move Residential	OC / CC received before sale	Nil (0%)	N/A	N/A
Land Purchase	Sale of bare land	Nil (0%)	N/A	N/A

Effective rates after 1/3rd land deduction per Notification 11/2017-CT(Rate) as amended. Affordable housing = carpet area ≤ 60 sq m (metros) or ≤ 90 sq m (non-metros) AND value ≤ ₹45 lakh.

What Counts as Affordable Housing for 1% GST?

To qualify for the 1% GST rate (w.e.f. 1 April 2019), a residential apartment must meet both conditions:

Carpet area: ≤ 60 square metres in metropolitan cities (Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai MMR) OR ≤ 90 square metres in other cities/towns.
Value: Total consideration (including land) does not exceed ₹45 lakh.

If either condition is not met, the regular 5% rate applies. A ₹44 lakh flat with 65 sq m carpet area in Mumbai does NOT qualify for 1% — the area limit is breached.

The 1/3rd Land Deduction — How GST Is Actually Calculated

Under CGST Notification 11/2017, when a builder sells an under-construction flat at a single composite price (land + construction), the government mandates that 1/3rd of the total consideration shall be deemed to represent the value of land and is excluded from GST. GST is thus levied only on 2/3rd of the total price.

Example calculation:
Flat consideration = ₹90 lakh
Land component (1/3rd) = ₹30 lakh (excluded from GST)
Taxable value (2/3rd) = ₹60 lakh
GST at 5% = ₹3 lakh
Total cost to buyer = ₹93 lakh + stamp duty + registration.

Note: If the land value is separately specified in the agreement and is higher than 1/3rd, the builder can use the actual land value instead. However, in practice, most developers use the 1/3rd deduction formula.

Why Buyers Cannot Claim ITC on GST Paid

Buyers of residential property cannot claim Input Tax Credit on the 5% or 1% GST paid. The reasons:

Section 17(5)(d) of the CGST Act blocks ITC on “goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account.”
Under the new rates effective from 1 April 2019, builders operate under a no-ITC scheme. They cannot claim ITC on inputs (cement, steel, labour), so there is no ITC credit to pass on to buyers either.
The GST paid by the buyer at 5% or 1% is a pure cost — there is no offset available.

Note for commercial buyers: A GST-registered business purchasing a commercial property under construction may be able to claim ITC if the property is used for business purposes and the purchase is at the pre-April 2019 12% rate. Consult a CA for commercial property ITC eligibility.

Stamp Duty and Registration — Separate from GST

Stamp duty and registration charges are state government levies, not GST. They are payable regardless of whether the property attracts GST or not (even on ready-to-move zero-GST properties). Typical rates:

State	Stamp Duty	Registration
Maharashtra	5% (metro) / 4% (rural)	1%
Delhi	6% (men) / 4% (women)	1%
Karnataka	5% (above ₹45L)	1%
Tamil Nadu	7%	4%
Telangana	5%	0.5%
West Bengal	6% (above ₹1 Cr)	1%

Rates are indicative and subject to state amendments. Always verify current rates with the state registration department before registration.

GST on Joint Development Agreement (JDA)

A Joint Development Agreement (JDA) involves a landowner contributing land and a developer constructing units in exchange for a share of flats or revenue. GST implications for each party:

Transfer of Development Rights (TDR) by landowner to developer: Treated as a supply of service by the landowner. GST is payable by the developer under Reverse Charge Mechanism (RCM) per Notification No. 4/2018-CT(Rate). The time of supply is when the developer issues the Completion Certificate (CC) or first occupancy.
Construction services by developer to landowner (flats given as consideration for land): Treated as a supply of services — taxable at 5% (or 1% if affordable housing) on the value of the residential units to be transferred to the landowner.
Developer’s portion of flats sold to third-party buyers: Standard GST rates apply — 5% or 1% on under-construction units; nil on OC-received units.

JDA Complexity: GST treatment of JDAs has been subject to multiple AAR rulings and CBIC circulars. The tax incidence on both parties depends on area sharing vs revenue sharing models, time of transfer of development rights, and type of units. Always take CA advice before signing a JDA.

Frequently Asked Questions

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

No. There is no GST on purchase of a completed property (ready-to-move flat) where the Occupancy Certificate (OC) or Completion Certificate (CC) has been issued before or at the time of sale. Such transactions are treated as a sale of immovable property and fall outside the GST net. However, stamp duty and registration charges (paid to the state government) are still applicable at standard rates.

What is the GST rate on under-construction property?

GST on under-construction residential apartments is 5% (effective rate after the 1/3rd land deduction, making it approximately 5% of the total consideration including land). For affordable housing units — flats with carpet area up to 60 sq m in metros or 90 sq m in non-metros, with a value up to ₹45 lakh — the GST rate is 1% (without ITC). These rates have been in effect since 1 April 2019. Before April 2019, the rate was 12% with ITC.

Why is 1/3rd of the property value deducted for GST calculation?

Under GST, land value is excluded from the taxable consideration because land is not goods or services. CGST Rule 42 and Notification No. 11/2017 provide that where a single price is charged for land and construction (as in an under-construction flat sale), 1/3rd of the total consideration is deemed to be the land component and is excluded from GST. So GST is effectively charged only on 2/3rd of the consideration. Example: If a flat costs ₹90 lakh, GST at 5% applies on ₹60 lakh (2/3rd), making the GST ₹3 lakh.

Can I claim Input Tax Credit (ITC) on GST paid for buying a flat?

No. The buyer of a residential flat cannot claim Input Tax Credit on GST paid. ITC is blocked under Section 17(5)(d) of the CGST Act for goods or services used for construction of an immovable property for personal use. This block applies to buyers. Even for commercial property purchases under construction, buyers typically cannot claim ITC unless the property is used exclusively for business purposes and they are registered under GST. The developer/builder also cannot pass on ITC to buyers under the new GST rates (5%/1%) since the builder himself is required to operate under the no-ITC regime.

What are the GST implications of a Joint Development Agreement (JDA)?

In a Joint Development Agreement (JDA), the landowner gives land to a developer in exchange for a share of the developed units (area sharing) or a revenue share. GST implications: (1) The developer is liable to pay GST on the construction services provided to the landowner — treated as supply of construction services against consideration in the form of land. (2) The landowner is liable to GST on the transfer of development rights (TDR/FSI) to the developer — treated as a supply of services. (3) The time of supply for TDR is when the developer completes the project and the OC is issued. GST on TDR is payable by the developer under reverse charge mechanism (RCM) as per Notification No. 4/2018-CT(Rate).

GST Registration Capital Gains on Property Rental Income Tax Section 54 Exemption Section 54EC Bonds File ITR with Property Income

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