GST on Construction & Real Estate — 5%, 1% or Exempt?

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

Affordable housing under construction is taxed at a 1% effective GST rate without ITC. A unit qualifies only if it meets both a carpet-area limit (60 sqm in metros, 90 sqm in non-metros) and a value cap of ₹45 lakh. If either condition is not met, the flat falls to the 5% rate.

No. The GST 2.0 rationalisation effective 22 September 2025 restructured most goods and services into a two-slab system but left residential real-estate rates unchanged — under-construction flats stay at 5%, affordable housing at 1%, and ready-to-move flats remain exempt. GST 2.0 did, however, cut cement from 28% to 18%, lowering builder input costs.

Works contracts now attract a uniform 18% GST with ITC. Under GST 2.0 (effective 22 September 2025) the earlier 12% slab was removed, so residential and government/infrastructure works contracts that were taxed at 12% have moved to 18%. Commercial and renovation works contracts were already at 18%.

Yes. The concessional 12% rate that applied to government works contracts (roads, bridges, dams, canals, railways and similar notified works) was withdrawn under GST 2.0. From 22 September 2025 these government works contracts are taxed at the uniform 18% rate like other works contracts.

Yes. A contractor providing a works contract service can claim Input Tax Credit on inputs and input services used to provide that contract. This differs from a builder selling flats under the 5%/1% scheme, who cannot claim ITC. Note that ITC on works-contract services received for constructing your own immovable property is generally blocked under Section 17(5).

No. Builders who sell under the 5%/1% scheme (all new projects since 1 April 2019) cannot claim ITC on cement, steel, tiles, paint, labour or other inputs. ITC was available only under the old 12%-with-ITC scheme, which is closed to new projects. The blocked input GST becomes an embedded cost in the flat price.

GST is charged on the agreement value after a one-third deduction for the land component, per Notification 11/2017-CT(R). For example, on a ₹60 lakh regular flat, GST at 5% works out to ₹3 lakh, so the buyer pays ₹63 lakh. On a ₹45 lakh affordable-housing flat, GST at 1% is ₹45,000. GST is payable on each stage payment made before the completion certificate is issued.

Yes. Preferential location charges (PLC), floor-rise charges, car-parking charges and club-membership charges collected by the builder form part of the taxable value of the flat and attract the same GST rate as the flat (5% or 1%). They are treated as part of the composite construction supply.

The sale of an under-construction commercial unit (shop or office) is widely cited at 12% GST with ITC available to a registered business buyer using it for taxable supplies. Some of the market treats commercial under-construction at 18% after GST 2.0, so confirm the current rate on the GST portal before invoicing. A completed commercial unit sold after OC/CC is exempt from GST.

Yes. Under a JDA the developer's share of flats is taxed at 5% (or 1% for affordable housing) on the proportionate value of those units, without ITC. The transfer of development rights (TDR/FSI) by the landowner and the developer's construction service to the landowner also have specific GST treatment, so a JDA should be structured with professional advice.

GST at 18% applies on monthly maintenance charges collected by a housing society or RWA only if the charge exceeds ₹7,500 per member per month, and only when the society's aggregate turnover crosses the registration threshold. If either condition is not met, the maintenance is exempt. This is separate from the GST on the flat purchase itself.

Registration is mandatory once aggregate turnover crosses ₹20 lakh in a financial year (₹10 lakh in special-category states). Most builders and works-contractors exceed this and must register, charge the correct rate, issue tax invoices and file GSTR-1 and GSTR-3B. Inter-state supply of services can trigger mandatory registration regardless of turnover.

No. The resale of a ready, completed flat (one that already has its OC/CC) is a sale of immovable property and is outside the scope of GST. GST applies only on the first sale of a flat that is still under construction. Stamp duty and registration charges, which are state levies, still apply to a resale.