GST on Real Estate: Exploring the GST rates and its impact

By Online Legal India Published On 09 Jan 2026 Category GST

GST on real estate is a topic of confusion for many. GST or Goods and Services Tax is an indirect tax. It is levied on the supply of goods and services in India. In the case of real estate, GST has reshaped the functioning of the property market.

Are you a property buyer? Are you a developer? Or are you just a reader on this page?

Understanding GST on real estate helps you to make informed decisions. Sounds interesting? Then please give us a moment. In this blog, I will tell you everything you need to know about GST on real estate. You will learn what it is, why it matters and how it affects the stakeholders.

Let’s read together.

What is GST?

Before telling you about GST rates on real estate in India, you need to know what GST is. GST refers to the Goods and Services Tax in India. As I mentioned earlier, it is an indirect tax.

Furthermore, GST has replaced various indirect taxes in India. Do you know what these taxes are?

These include excise duty, VAT, services tax and so on.

On 29th March 2017, the GST tax Act was passed in the parliament. It came into effect from 1st July 2017.

What is GST on Real Estate

GST on real estate refers to the GST rates levied on buying property. To make it simpler for you:

Residential properties:

Are you planning to buy a house? Flat? Or a property? This is what you need to know about GST on real estate:

(i) For residence, the rate is currently set as as 5%. You need to remember that it is not under the affordable housing category

(ii) Are you opting for commercial properties? The GST rate on real estate is 12% with full ITC.

Remember that these rates help to reduce the tax burdens.

Moreover, it helps to bring clarity in the real estate sector for home buyers.

Since I told you earlier about non-affordable housing, now let me tell you about the affordable housing rate.

(Special rates)

Affordable properties:

Properties that qualify under affordable housing schemes
Here, the GST rate is 1% without ITC

Do you know why this category exists?

To promote affordable housing for all, the special GST rates in this sector.

Thinking about the criteria for GST on real estate? Here is what it is:

In metro cities , homes with a carpet area up to 60 square meters
Here, the price of homes needs to be 45 lakhs
Thirdly, in non-metro cities, the carpet area up to 90 square meters
Moreover, the price of these homes needs to be up to 45 lakhs

Do you know the reason behind this concessional rate? It is designed to make housing more accessible. Especially for the low-income families. Besides, it helps in boosting the housing sector’s growth.

Why do you need to pay GST on real estate?

Primarily, you need to pay GST on real estate to contribute to the government’s revenue.
This tax helps to ensure that builders, developers and contractors contribute to the national economy.
When you pay GST on real estate, you help to build infrastructure and other public services.
Moreover, GST brings more clarity to the real estate sector.
It also helps to reduce corruption and tax evasion.

If you are a buyer, paying GST on real estate helps to ensure:

1. You are buying property that complies with tax regulations
2. (ii) For developers, you can claim tax credits on input costs.
3. (iii)This helps in reducing the overall tax burden.

Pre-GST taxes on real estate

Before knowing the GST rate on real estate, let's explore the pre-GST tax rates on real estate.

The table below is simplified for you:

Tax	Rate	Applies When
Service Tax	4.5%	Under-construction purchase
VAT	1–4%	Under-construction property
Stamp Duty	5–7%	Property purchase
Registration	0.5–1%	Registration stage

Here, I need to tell you this. VAT registration charges and Stamp duty vary by state.

In completed or ready-to-sell properties, VAT wasn’t applied. It used to be under the indirect tax regime.

GST rate on real estate (currently)

Aspect	GST Applies	Rate	ITC
Ready-to-move property	No	Nil	No
Under-construction (CLSS)	Yes	8%	Yes
Under-construction (Affordable housing – promoter)	Yes	1.5%	No
Under-construction (Non-affordable, post 29-04-2019)	Yes	7.5%	No
Under-construction (Other cases)	Yes	12%	Yes
Resale property	No	Nil	No
Sale of land	No	Nil	No
Works contract	Yes	18%	Yes
Works contract (Composite)	Yes	18%	Yes
Composite works – Govt authorities	Yes	12%	Yes
Composite works – Public use	Yes	12%	Yes
Composite works – Affordable housing	Yes	12%	Yes
Works contract (75% earthwork – Govt)	Yes	18%	Yes

The rates are taken after cutting the 1/3 amount. It applies to land cost.

The impact of GST on real estate in Byers

If you have read so far, I know what you are probably thinking about. If you are a buyer, how does GST on real estate affect you? Here is how it matters for the buyers:

(i) Earlier, as a buyer had to pay VAT, service tax, registration charges and stamp duty

(ii) VAT, registration charges and stamp duty differ from one state to another

(iii) As a developer, you had to pay CST, OCTROI and customs duty

(iv) Here, the credit was unavailable

Now:

Under GST, a single tax rate applies to you
A rate of 12% is applicable to all properties under construction (Before 31^st March 2019) . From 1^st April 2019, the GST rate is 1 to 5%
You don’t have to pay GST for completed or ready-to-sale properties (Previously)
As a result, you (buyers) will benefit from price reductions
So, we can say GST on real estate has a positive impact on buyers
For completed properties, you don’t have ot pay GST
The net tax rate has also been reduced over a period

GST rate on real estate: Impact on developers

Are you a developer? Are you thinking about how the GST rate on real estate can help you? Here it is simplified for you:

Previously, you had to bear the excise duty, VAT, entry taxes and so on
Besides, you had to pay taxes on raw materials, inputs and services
The taxes charged over labours, professional fees, legal charges and so on
This impacts pricing. The burden was transferred to the buyers.

Now:

(i) Under GST, your construction cost is reduced

(ii) GST rates on real estate are reduced due to the ITC on raw materials

(iii) You can get some reduction on logistics costs.

(iv) Finally, you can see improvements in margins

Here, let me be honest with you. There are some demerits of GST on real estate:

As a Residential developer you cannot claim ITC after
If you are going for commercial projects only or old-regime projects, you can claim ITC

But, on the brighter side:

Under old laws, a large amount (of what you are spending) remains unrecorded
Under GST, the credit availability is there on inputs and cloud storage
The invoice reduces under recording of expenditure

GST on real estate impact on stakeholders

If you have scrolled down this far, I know what you are probably thinking. If you are neither a buyer nor a developer, what about you? How can GST rates on real estate impact you?

I will break it down for you:

The allied services and their impact depend on material suppliers, labourers, service suppliers and so on
The impact of GST rates on real estate has an impact on the whole industry

Sill felling confused? Have a look at the table below:

Product	GST
Marble / Granite	18%
Paints	18%
Cement	18%
Steel	18%
Sand	5%
Sand / Fly ash / Bricks	5% (No ITC) or 12% (With ITC)

Final thoughts

At the end, I would tell you, GST on real estate has simplified the tax structure. It gives transparency to the real estate sector. In contrast, it increases the cost for home buyers (under construction properties).

If you are planning to buy a property, it is important for you to understand the GST rates on real estate. So, stay informed and make decisions. It will be beneficial for you. If you need any assistance connect with Online Legal India.

FAQs

1. Does GST on real estate apply to ready to move in properties?

No, GST GST does not apply to ready-to-move or completed properties. It is only applicable to under-construction properties.

2. Can you tell me the current GST rate on real estate for affordable housing?

The GST rate on affordable housing is 1% without ITC (introduced and effective from 1 April 2019)

3. How do GST rates on real estate impact property prices?

The GST rates on real estate might increase or decrease prices depending on some factors

ITC availability
Project cost structure
Developer pricing

4. I am a developer. Can I claim GST on input credits?

Yes, as a developer, you can claim GST input credits for taxes. It applies to taxes you pay for services and construction materials.

Disclaimer

This article is for informational purposes only and does not constitute legal advice. Online Legal India is a digital platform. If you require legal assistance, we strongly recommend consulting a qualified lawyer or law firm.

Share With :

Author:

Online Legal India

Online Legal India, a subsidiary of FastInfo Legal Services Pvt. Ltd., is registered under the Companies Act, 2013. Backed by a skilled team of professionals, we offer a comprehensive range of services. We deliver high-quality solutions to individuals, business owners, company founders, corporate entities, and more, addressing their company registration needs and resolving various challenges they encounter in everyday lives.