GST applies only to under-construction property, not to completed (ready-to-move) flats. An under-construction residential flat is taxed at 5% without ITC, or 1% without ITC for affordable housing (≤ ₹45 lakh and ≤ 60/90 sqm carpet area). A ready-to-move flat with an OC/CC is fully exempt — only stamp duty applies. Commercial under-construction units are now taxed at 18% with ITC after the GST 2.0 reform (22 September 2025).
GST on Real Estate — Decision Table
Every common property scenario, with the GST rate and whether the buyer gets Input Tax Credit.
| Property / Supply | Status | GST Rate | ITC to Buyer |
|---|---|---|---|
| Affordable residential (≤ ₹45L, ≤ 60/90 sqm) | Under construction | 1% | No |
| Other (non-affordable) residential | Under construction | 5% | No |
| Any residential flat | Ready-to-move (OC/CC) | Exempt | — |
| Commercial unit (office, shop) | Under construction | 18% | Yes |
| Commercial unit | Ready-to-move (OC/CC) | Exempt | — |
| Works contract (construction service) | — | 18% | Yes* |
| Residential rent → individual | — | Exempt | — |
| Commercial rent → registered business | — | 18% | Yes |
| Land sale (plot only) | — | Outside GST | — |
* Works-contract ITC flows to the contractor, not to the flat buyer. Residential 1%/5% rates are the no-ITC scheme (Notf 03/2019) unchanged by GST 2.0; commercial moved 12%→18% on 22 Sep 2025. Confirm on the official GST portal before invoicing.
Affordable Housing — 1% or 5%?
For under-construction residential property, one test decides 1% vs 5%: whether the flat qualifies as "affordable housing". Both the price and carpet-area limits must be met together.
Affordable housing — no ITC
- Gross price (excl. GST) ≤ ₹45 lakh
- Carpet area ≤ 60 sqm in metros
- Carpet area ≤ 90 sqm in non-metros
- Both price AND area limits must be met
- No Input Tax Credit to buyer
Other residential — no ITC
- Price above ₹45 lakh, or
- Area above the 60/90 sqm limit
- All premium & larger flats
- Under construction only
- No Input Tax Credit to buyer
The 1% and 5% residential rates come with a strict no-ITC condition. GST the developer pays on cement (now 18%), steel and works contracts cannot be passed to you as credit — it is embedded in the price. So 5% is the final, absolute cost on the construction value, with nothing to claim back.
Not sure if your flat qualifies as affordable at 1%?
Get My GST Rate →How GST Adds Up on a Flat
GST is charged only on the construction value of an under-construction flat. Compare a ₹40 lakh affordable flat, a ₹80 lakh premium flat and a ready-to-move purchase.
1% Affordable flat (₹40L)
5% Premium under-const. (₹80L)
Timing matters. GST applies to instalments paid while the project is under construction. Any consideration paid after the Occupancy/Completion Certificate is issued is for a ready property and carries no GST — only stamp duty and registration. Buying at the ready-to-move stage avoids GST entirely.
Buying an under-construction flat? Get your GST and TDS on property checked.
Talk to a Tax Expert →Commercial Property & Works Contracts
The GST 2.0 rationalisation effective 22 September 2025 removed the 12% slab. Commercial under-construction property moved from 12% to 18% (ITC still available to a business buyer), and construction works contracts are now a flat 18%.
| Supply | Old rate | GST 2.0 rate (from 22 Sep 2025) | ITC |
|---|---|---|---|
| Commercial under-construction sale | 12% | 18% | Yes |
| Works contract (residential / commercial) | 12% / 18% | 18% | Contractor |
| Cement (key input) | 28% | 18% | Contractor |
| Residential 1% / 5% scheme | 1% / 5% | Unchanged | No |
Residential no-ITC rates were kept; commercial and works-contract rates rose to 18%. Cement fell 28%→18%, cutting developer input cost.
Commercial buyer benefits
- Business buyer can claim full ITC on the 18% GST
- Lower cement GST (18%) reduces build cost
- Clear single 18% rate — no slab disputes
Watch out for
- Higher headline rate (18% vs old 12%)
- ITC needs valid invoice & GSTR-2B match
- No ITC if the unit is for exempt/personal use
Buying or building commercial property? Get your ITC position mapped.
Talk to a GST Expert →GST on Property Rental
Renting real estate follows separate rules. Commercial rent is 18% when the landlord is registered; residential rent to an individual is exempt; but residential property let to a GST-registered business attracts 18% under Reverse Charge (RCM) since 18 July 2022.
- Commercial premises (shop, office, warehouse) → 18%, landlord charges it, tenant claims ITC.
- Residential → individual for personal use → fully exempt.
- Residential → GST-registered business → 18% under RCM, tenant self-pays (ITC often blocked).
- Sale of bare land / plot is outside GST — it is neither goods nor services.
Earning rental income from property? Get registration and RCM sorted.
GST on Rent Guide →Real Estate GST — Key Points
- GST only on under-construction property
- No GST after OC/CC is issued
- No ITC to residential flat buyers
- 1% needs both price & area limits
- Commercial under-const. now 18%
- Works contracts taxed at 18%
- Bare land sale outside GST
- Commercial rent at 18% (ITC to tenant)
- Residential-to-business rent under RCM
- Stamp duty is separate from GST
GST applies only to the construction value of an under-construction unit. Stamp duty, registration charges, and (on resale) capital-gains tax are separate levies outside GST. Do not confuse the two when budgeting a purchase.
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