What is the Latest GST Rate on Purchase of Property in India?

Buying a home is a dream for many, but it comes with its share of taxes and paperwork. One major tax to understand is the Goods and Services Tax (GST), which applies to property purchases in India. Unlike the old days of multiple taxes, GST has simplified real estate taxation. However, GST doesn’t apply to every property transaction. In fact, GST is charged only on under-construction properties, while completed (ready-to-move) homes and resale properties are fully exempt. 

In this blog, we’ll walk you through the current GST rates on residential property, the difference between affordable and non-affordable housing rates, input tax credit rules for homebuyers, scenario-wise GST applications, required documents for GST compliance and property registration, and some FAQs. Let’s break down GST on property in simple terms!

What are the Current GST Rates on Residential Property?

Under the current GST regime, GST is applicable only on residential property purchases that are under construction, not on completed properties. If the property has received a completion certificate or is ready for occupancy, the sale is treated as a sale of immovable property and is not subject to GST – only state levies like stamp duty apply. For under-construction residential properties, the GST rates were revised in April 2019 to make home buying more affordable. Here are the prevailing GST rates as of now:

It’s important to note that the GST is calculated only on the construction component of the property’s value (land is excluded from GST). In practice, the government treats one-third of the property price as the value of land, so GST is effectively charged on the remaining two-thirds (the construction portion). This means the actual tax outgo is a bit lower than the headline 1% or 5% on the full price. Also, these GST rates (1% or 5%) are without any Input Tax Credit (ITC) benefit – we’ll explain more on ITC shortly. First, let’s clarify the difference between “affordable” and “non-affordable” housing in GST terms.

What is the GST rate for Affordable and Non-Affordable Housing?

The GST rate varies based on whether a housing project is classified as affordable housing or not. Below is a quick comparison:

Disclaimer: These rates apply only to under-construction residential properties. If you’re purchasing a ready-to-move property (completion certificate obtained) or a resale property, GST is 0% – those transactions are outside the scope of GST.

Input Tax Credit Rules for Homebuyers

Input Tax Credit (ITC) is a mechanism in GST that allows businesses to offset the GST they pay on inputs (purchases) against the GST they collect on sales. However, as a homebuyer purchasing a house for your own use, you generally cannot avail any input tax credit on the GST paid for the property. Indian GST law specifically blocks ITC on construction of an immovable property for personal use.

Even developers selling the property have restrictions on ITC in the housing sector. Under the current 1% and 5% GST rate structure for residential projects, builders are not allowed to claim ITC on their input materials/services. The idea behind removing ITC and lowering the rate was that builders should pass on the benefit of lower tax in the form of reduced prices. For homebuyers, this means the price you pay has GST added at a low rate, but you’re not getting any separate credit for the taxes the builder paid on cement, steel, etc. Those input taxes become part of the builder’s cost.

Is there any scenario where you can get a GST credit as a buyer? Practically, if you are buying the property for business purposes (for example, your company buys a building, or you plan to rent it out commercially under a registered business), there might be some room to claim ITC – but only if strict conditions are met. Recent court judgments have allowed ITC in cases where the construction is integral to a renting business (treating the building as a “plant” for business use). However, for a typical individual purchasing a home to live in, GST is a non-creditable expense. 

Documents Required for GST Compliance & Property Registration

• Sale Agreement and Sale Deed
• GST Invoices/Receipts from Builder
• Completion Certificate or Occupancy Certificate
• Stamp Duty and Registration Fee Receipts
• Encumbrance Certificate (EC) and Tax Paid Receipts