GST on Real Estate 2026 — Under Construction Flat, Rental & Works Contract
Updated: 3 June 2026 | CGST Act | Rates from 1 April 2019 | No GST on Ready Possession
GST applies to under-construction properties only — not to completed (ready possession) flats. Rates: 1% for affordable housing (≤₹45L, ≤60/90 sqm carpet area); 5% for other under-construction residential; 12% for commercial properties. No ITC available to homebuyers for residential properties. No GST once completion certificate is received — stamp duty applies instead.
5%
GST on under-construction residential property (non-affordable) — no ITC to buyer.
Affordable housing (price ≤ ₹45L + carpet area ≤ 60/90 sqm): 1% GST. Ready possession: 0% GST.
Affordable housing (price ≤ ₹45L + carpet area ≤ 60/90 sqm): 1% GST. Ready possession: 0% GST.
GST Rates on Real Estate — Summary
| Property Type | Status | GST Rate | ITC to Buyer |
|---|---|---|---|
| Affordable residential (≤₹45L, ≤60/90 sqm) | Under construction | 1% | No |
| Non-affordable residential | Under construction | 5% | No |
| Any residential property | Ready possession (OC received) | 0% (no GST) | N/A |
| Commercial property (office, shop) | Under construction | 12% | Yes |
| Commercial property | Ready possession | 0% (no GST) | N/A |
| Residential rental (to individual) | — | Exempt | N/A |
| Commercial rental (to registered person) | — | 18% (RCM may apply) | Yes (tenant claims) |
| Works contract (residential construction) | — | 12% (affordable) / 18% (others) | — |
Affordable Housing Definition for GST
For GST purposes (1% rate), a residential house qualifies as "affordable" if ALL conditions are met:
- Price: Gross consideration (excluding GST) ≤ ₹45 lakh
- Carpet area (metro cities — Delhi, Mumbai, Bengaluru, Hyderabad, Chennai, Pune, Ahmedabad): ≤ 60 square metres
- Carpet area (non-metro cities): ≤ 90 square metres
- Both the price AND the area conditions must be met simultaneously
Frequently Asked Questions
What is the GST rate on under-construction property?
GST on under-construction residential property (from 1 April 2019): Affordable housing (price ≤ ₹45L and carpet area ≤ 60 sqm in metro / 90 sqm in non-metro): 1% GST (no ITC). Other under-construction residential: 5% GST (no ITC). Commercial property: 12% GST (with ITC allowed for commercial). There is no GST on ready-to-move-in (completed and received occupancy certificate) properties.
Is there GST on ready possession flat purchase?
No GST on ready possession (completed) flats. Once a property has received a Completion Certificate (CC) or Occupancy Certificate (OC) from the competent authority, it is considered immovable property — not "supply of service" under GST. Transfer of completed immovable property is governed by State Stamp Duty and Registration charges, not GST. Only under-construction properties attract GST.
Can I claim ITC on GST paid on flat purchase?
No. ITC is NOT available to homebuyers on GST paid for residential under-construction property. From 1 April 2019, the GST rates for residential property were reduced (1% / 5%) with the condition of no ITC. Previously at 12% with ITC, now at 5% without ITC. Developers also cannot claim ITC on construction materials for residential projects (blocked credit). For commercial property under construction, ITC is allowed (12% GST rate).
What is the GST on works contract for construction?
GST on works contract: Construction of residential complex (affordable): 12% (for sub-contractor to main contractor). Construction of residential complex (other): 18% works contract GST. Construction of commercial complex: 18%. Repair / maintenance of any structure: 18%. From consumer perspective, the effective rate is 1%/5% as the developer pays 18% works contract GST on sub-contracts and absorbs it (no ITC pass-through to buyers after April 2019 regime change).
Is rental income from commercial property subject to GST?
Rental income from commercial property is subject to GST at 18% if the landlord's total rental/service income exceeds GST registration threshold (₹20 lakh / ₹10L for special states). If a company or registered person takes commercial property on rent and pays rent, they must deduct RCM (Reverse Charge Mechanism) — effective from 18 July 2022, RCM on renting to registered tenants from unregistered landlords. Residential property rent to individuals is exempt from GST.
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