GST applies only to under-construction property. Buying an under-construction residential flat attracts 5% GST without ITC; affordable housing attracts 1% without ITC. A ready-to-move (OC/CC received) home is nil-rated — outside GST. In every case, 1/3rd of the price is deemed land and excluded, and buyers cannot claim ITC. Stamp duty and registration are separate state levies.
GST Rate on Property Purchase — Decision Table
Every common property-purchase scenario, the effective GST rate after the 1/3rd land deduction, and who can claim Input Tax Credit.
| Property & status | GST Rate | Builder ITC | Buyer ITC | Notes |
|---|---|---|---|---|
| Affordable residential — under construction | 1% | No | No | ≤₹45L & ≤60/90 sq m |
| Other residential — under construction | 5% | No | No | Default new-flat rate |
| Commercial — under construction | 12% | Yes | No* | With ITC; *buyer ITC only if for business |
| Ready-to-move residential — OC/CC received | Nil | — | — | Sale of immovable property |
| Resale / secondary sale of a completed flat | Nil | — | — | No GST on resale homes |
| Bare land / plot | Nil | — | — | Land is not goods or service |
Effective rates are after the 1/3rd land deduction (Notification 11/2017-CT(R) as amended by 3/2019-CT(R)). Real-estate slabs were NOT changed by the GST 2.0 reform of 22 September 2025; confirm on the official GST portal before you pay.
Under-Construction vs Ready-to-Move
GST is a tax on the service of construction. So the single question that decides whether you pay GST is: has the builder received the Occupancy Certificate (OC) or Completion Certificate (CC) before the sale? If yes, it is a sale of a finished building — outside GST. If no, you are buying construction services and GST applies.
Ready-to-move — no GST
- OC / CC issued before or at sale
- Resale of any completed flat
- Treated as sale of immovable property
- Only stamp duty & registration apply
- No ITC question — no GST charged
Under-construction — GST applies
- Booked before OC / CC
- 5% regular, 1% affordable housing
- No Input Tax Credit for the buyer
- 1/3rd of price excluded as land
- Charged on each instalment / demand
If you sign the agreement while the flat is under construction, GST applies to instalments raised before the OC is issued — even if the building is completed by possession. Buying only after the OC is in hand keeps the whole purchase nil-rated. Always confirm the OC/CC date in writing.
Not sure if your flat is "under construction" for GST?
Get My GST Rate →The 1/3rd Land Deduction
Land is neither goods nor a service, so it cannot be taxed under GST. When a builder sells an under-construction flat at a single price (land + construction), the law deems 1/3rd of the total consideration to be land and excludes it. GST is charged on the remaining 2/3rd — which is why the headline 7.5% becomes an effective 5%.
- 1Total priceSingle land + construction cost
- 2Deduct 1/3rdDeemed land value removed
- 3Taxable 2/3rdConstruction value that is taxed
- 4Effective GST5% (or 1% affordable) on total
How GST Adds Up — ₹90 Lakh Flat
5% Regular under-construction flat
Nil Ready-to-move flat (OC)
For a ₹40 lakh affordable home the effective 1% works out to about ₹40,000 of GST. If the agreement separately shows a land value higher than 1/3rd, the builder may use the actual figure — but most use the standard 1/3rd formula.
Want the GST on your booking amount worked out?
Use the GST Calculator →Why Buyers Get No ITC — and What Affordable Means
Under the rates effective 1 April 2019, builders opted into a no-ITC regime for the lower 5%/1% slabs, so there is no input credit to pass on. Separately, Section 17(5)(d) blocks ITC for anyone building an immovable property on their own account. The 5% or 1% you pay is therefore a pure cost.
| Who / What | ITC? | Reason |
|---|---|---|
| Homebuyer (residential flat) | No | Blocked under Section 17(5)(d) · builder is on no-ITC scheme |
| Builder — 5%/1% residential | No | No-ITC regime is the condition for the lower rate |
| Builder — 12% commercial | Yes | Old-rate option retains full ITC on inputs |
| Business buyer of commercial unit | No* | *Generally blocked; possible only if for taxable business use |
GST 2.0 (22 Sep 2025) cut input costs — cement 28%→18%, bricks/tiles/marble/granite 12%→5% — lowering the builder's cost base, but the buyer's 5%/1%/nil slabs are unchanged.
What Counts as Affordable Housing?
To get the 1% rate (w.e.f. 1 April 2019) a residential unit must meet both conditions below. Fail either and the regular 5% applies.
- Carpet area ≤ 60 sq m in metros (Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai MMR) or ≤ 90 sq m elsewhere.
- Total price (including land) ≤ ₹45 lakh.
- Example: a ₹44 lakh flat with 65 sq m carpet area in Mumbai does not qualify — the area limit is breached, so 5% applies.
The GST slab is only part of your cost. Because buyers get no ITC, a builder's input savings from GST 2.0 (cheaper cement and tiles) should show up as sharper base prices — negotiate on the all-in figure, not just the tax line.
GST on Joint Development Agreements (JDA)
In a JDA the landowner contributes land and the developer builds units, sharing the finished flats or revenue. Three GST events arise:
- Transfer of Development Rights (TDR/FSI) by the landowner is a supply of service; GST is paid by the developer under Reverse Charge (RCM) per Notification 4/2018-CT(R), timed to the OC/first occupancy.
- Construction service to the landowner (flats given for the land) is taxable at 5% (or 1% affordable) on the value of the landowner's units.
- Developer's own flats sold to buyers follow the normal rates — 5%/1% while under construction, nil once the OC is issued.
✓Buy with no GST if
- The OC / CC is already issued
- It is a resale of a completed flat
- You are purchasing bare land or a plot
- You can wait for possession-ready inventory
!Expect GST if
- You book before the OC is issued
- You pay instalments during construction
- It is a regular (non-affordable) new flat at 5%
- You are a JDA landowner receiving units
Stamp Duty & Registration Are Separate
Stamp duty and registration are state levies, not GST, and apply to every purchase — including nil-GST ready-to-move homes. They typically run 4–7% (stamp duty) plus about 1% (registration), varying by state and by buyer category (many states offer a concession for women buyers). Verify current rates with the state registration department.
The GST incidence on a JDA depends on area-sharing vs revenue-sharing, the timing of the development-rights transfer and the unit type, and has been shaped by multiple AAR rulings and CBIC circulars. Take professional advice before signing.
- Rates & notifications: gst.gov.in
- CBIC rate finder: cbic-gst.gov.in
- Real-estate rates: Notification 3/2019-CT(R) (eff. 1 Apr 2019), amending 11/2017-CT(R)
- TDR / RCM: Notification 4/2018-CT(R); ITC block: Section 17(5)(d), CGST Act 2017
Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.