Disqualification of Director under Companies Act, 2013
12 Feb, 2026
By Online Legal India
Published On 27 Dec 2025
Category GST
Many people plan to buy a home in India. So, they must understand the GST on residential property. This is crucial for all Indian stakeholders. This can include homebuyers, investors, developers, and landlords and so on. If you understand this, it can help you avoid costly penalties. They can also understand the property pricing, rental agreements, and construction services. In this blog, you will learn about the GST rate on residential property, and more.
In India, the GST on residential property applies only to the under-construction properties. All residential properties can be divided into the following two categories. It includes:
a) Affordable Housing
It is a house that have a carpet area of up to 60 sq. meters in metropolitan cities and up to 90 sq. meters in non-metropolitan cities. The price is up to Rs. 45 lakhs (maximum). This attracts a 1% GST rate for properties.
b) Non-Affordable Housing
It means a residential property that does not meet the affordable housing criteria. It applies to 5% GST rate.
Thus, ready-to-move-in properties or flats, with a completion certificate, are GST-exempt in India. The sale of bare land is also exempt under GST.
Here is the table outlining the Old and new GST rate on different types of residential properties:
| Property Type | GST Rate (Before April 2019) | GST Rate (After April 2019) |
|---|---|---|
| Affordable housing under construction | Previously, the 8% GST is charged with input tax credit (ITC). | The current GST rate applies to 1% without input tax credit. |
| Non-affordable housing under construction | The earlier GST rate is 12% with input tax credit. | The 5% GST rate is the updated rate without input tax credit (ITC). |
| Ready-to-move-in Properties | No GST | No GST |
GST on Property Purchases in India
In the 2017 GST tax reforms, GST rate suits to the under-construction properties that await a completion certificate or ready for occupancy. GST is suitable for both buyers and developers. Before the implementation of GST, real estate developers in India handles several taxes. It includes- VATs (Value added Tax), central excise duty, entry tax, etc. They cannot get their refunds for their development costs. This makes the situation worse. So, the buyers ended up with paying the price.
Thus, GST helps to bring transparency in the process. It outlines the applicable GST rate for property purchases in India.
Before the introduction of the GST in India, an aspiring flat owner pays various separate taxes. Each has its own rules and rates. Below is the table that outlines the Pre-GST taxes:
| Aspect | Pre-GST Structure | Post-GST Structure |
|---|---|---|
| Tax types | VAT, Excise duty, Service tax | Unified GST (CGST and SGST) |
| Rates for under-construction flats | 4.5% is a Service Tax + VAT (1%–5%, state-dependent) | 1% is for affordable housing, or 5% non-affordable housing |
| Ready-to-Move Flats | No Service Tax, only Stamp Duty & Registration Charges | No GST, only Stamp Duty & Registration Charges |
As per the Section 17(5) (d) of the CGST Act, taxpayers will not claim Input Tax Credit (ITC) on GST paid for constructing immovable property for their own use. This applies to both commercial and residential properties. Thus, the recent judgements has stated some exceptions.
In the case of the GST on residential property, the “plant and machinery” exception doesn’t apply to residential flats. Thus, when the property is for rental purposes, the developers can claim ITC. If it also qualifies under the plant exception, the developers in this case can claim ITC.
The commercial properties such as malls or offices can claim Input Tax Credit (ITC). It is applicable if it is built for rental income.
The GST helps to reduce the tax complexity, particularly for buyers. In case of developers, they may suffer from a higher cost due to the ITC removal on luxury projects. This tax system supports cost-effective property ownership. It focuses on make the real estate market more transparent.
The monthly charges for the flat's maintenance can include a GST component. It is because these fees are not exempt from taxation.
The GST on maintenance depends on two factors. Here they are:
• The annual turnover of the housing society
• Maintenance charges per member of the society per month
Below is the table that signifies the GST applicability with conditions:
| Condition | GST Applicability |
|---|---|
| Society’s annual turnover is below Rs. 20 lakh and charges is not more than Rs. 7,500 | No GST |
| The Society’s annual turnover is not more than Rs. 20 lakh and charges less than or equal to Rs. 7,500. | No GST |
| Society’s annual turnover is more than Rs. 20 lakhs and charges not more than Rs. 7,500 | No GST |
| Society’s annual turnover of more than Rs. 20 lakhs and charges more than Rs. 7,500 | The 18% GST is charged on the entire maintenance amount. |
Moreover, in case the maintenance charge us Rs. 10, 000. GST will be charged to the entire amount, compared to the excess of Rs 2,500.
Here is the table that outlines the description with Rs. 7,500 threshold:
| Included in Rs. 7,500 threshold | Description |
|---|---|
| Common area tax | It is shared on property taxes for maintenance |
| Sinking Fund | The funds are allocated for major repairs or renovations. |
| Security & Admin Fees | The costs apply to security personnel and admin work |
| Water & Facility Use | The charges suit to common water supply, clubhouse fees, etc. |
Below is the table that highlights the description not included in the Rs. 7,500 threshold:
| Not included in Rs. 7,500 threshold | Description |
|---|---|
| Private Property Tax & Parking Fees | The costs applies to personal-use areas such as parking |
| Non-Occupancy & Share Transfer Fees | The charges is suitable for specific circumstances such as rentals or ownership transfers. |
Here is the overview of GST calculation on flats:
Start with the Base Price
You must start with the basic cost of the flat before any extras.
Apply GST on the Base
The 5% GST attracts to under-construction residential properties. The 1% applies to affordable housing.
Add in the Extras
There is also an extra charges. It includes parking, maintenance, or clubhouse fees, which also has a GST.
Calculate Total GST
You need to add up all the GST amounts from the base and extra costs.
Get the Final Price
In case of getting the final price, you must combine the basic price, extras, and total GST.
Here is the impact of GST rates on Flat Buyers:
Increased Cost for Under-Construction Flats
GST adds 5% rate for regular housing and 1% attracts to an affordable housing. This results in a higher costs rather than GST-exempt ready-to-move flats.
Higher Loan and EMI Burden
The added GST has raised loan amounts and EMIs that impacts monthly budgets.
Shift to Ready-to-Move
There are several buyers that prefer ready flats to reduce GST costs.
Developer Compliance
The GST on flat buyers proves that developers meets GST rules to reduce future issues.
Transparency in Costs
GST stated about the total costs which helps to make financial planning.
Professional Guidance
Expert advice will help to navigate GST complexities and improve savings.
The GST focuses on simplifying taxes and improves transparency. Listed below are the key benefits of GST for residential real estate:
One Tax Nationwide
The GST applies a single tax across India to reduce the complexity. This usually helps developers and buyers.
Clearer Pricing
It reduces the hidden fees and signifies the actual tax portion in property prices.
More Formal Transactions
GST eliminates cash deals, gives transparency and build trust in the market.
The GST attracts 1% rate for government housing schemes. The major government schemes are Pradhan Mantri Awas Yojana and Rajiv Awas Yojana. The government has eliminates the GST rate to 1% to maintain the financial burden on homebuyers.
There is low GST on these affordable projects in which the government supports people in buying homes.
Conclusion
The GST on residential property is crucial for making informed real-time estate decisions. The 1% GST rate applies for affordable housing and 5% is charged to a non-affordable housing. The ready-to-move-in homes with completion certificates are considered as an Exempt from GST. You must always stay updated to these tax implications to maintain savings and avoid legal troubles. If you have a queries about it, reach out to Online Legal India.
Q1. What is the GST on Residential Property?
The GST on Residential property will apply only to the under-construction residential properties. It includes:
a) Affordable Housing: It attracts a 1% GST without Input Tax Credit or ITC for the builder
b) Non-Affordable Housing (Luxury/Premium): It charges a 5% GST rate without ITC for the builder.
Q2. Is GST Applies to all residential property purchases?
No, the GST is not applies to all residential property purchases.
Q3. What is the GST on Residential property below 45 lakhs?
The GST rate is 1% for residential property below Rs. 45 lakhs. It is qualified under the affordable housing scheme.
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.
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