No matter what you are buying, whether it’s your first apartment or a commercial unit, there’s one important amount that will be added to your total: GST (Goods and Services Tax). But where does it come into play? How should you evaluate the price you are paying? Let’s break it down.
When Does GST Apply?
Only on under-construction properties
- Exemption of GST on completed homes (those with Completion Certificate)
- Resale properties and land purchases are not subject to GST
- Affordable and Non-affordable What is counted?
- Affordable housing is defined as
- Carpet area ≤ 60 sq. m (metros) or ≤ 90 sq. m (non-metros)
- Price ≤ ₹45 lakh
Your home qualifies for a 1% GST if both of the following conditions are true.
How GST Is Calculated
GST is not levied on the gross amount. One third of the value of land is tax-exempt (A land value). You are therefore taxed 1/3rd, and you pay GST on the other 2/3rds.
Example 1:
- Flat Price: ₹60 Lakh (non-affordable)
- Taxable Value: ₹40 Lakh
- GST @ 5% = ₹2 Lakh
Example 2:
- Flat Price: ₹40 Lakh (affordable)
- Taxable Value: ₹26.67 Lakh
- GST @ 1% = ₹26.67
What ITC (Input Tax Credit) Would Be Involved?
If the developer has an input tax credit (ITC) component, they can shave their tax liability down by claiming credit on raw materials and services used in construction. However, and this is a huge however, for the new reduced GST rates (1% or 5%), there is no ITC for home buyers, and ITC will be lost for developers. Only ITC can be availed by the developers who choose the earlier 12% GST regime, but that is again increasing the tax liability of the buyer.
Commercial Properties
GST is 12% flat on under-construction commercial units such as:
This GST is levied with 100% ITC. This is preferable for most institutional investors or businesses, as they can reclaim it.
How Are Stamp Duty And Registration Handled?
These are entirely state-level taxes and distinct from GST.
- Typical rates:
- Stamp duty: 5%–8%
- Registration: 0.5%–1%
States also have rebates for women buyers or first-time homeowners. Always check your local rates.
JDAs & Reverse Charge Situations
Joint Development Agreements (JDA) are a little more complex when it comes to GST liabilities. If the developer is transferring the constructed area instead of taking an advance, the GST may be reverse charged. E.g., courts (e.g., Patna High Court) in 2025 have held that certain types of JDAs dated 2017–2019, i.e., even before completion, would be subject to GST, which may result in delayed tax notices to buyers. Always check how your deal is structured.
Pro Tips Before You Buy
- Question for your builder: Is the price quoted inclusive of GST?
- Ensure you always ask for a proper GST invoice (with GSTIN)
- Look for a Completion Certificate—it gets you off the hook with GST
- GST-free stamp duty and registration—include it in your budget
TL;DR – Key Takeaways
- GST is applicable on properties that are under construction
- How much is the GST on your property? 1% for affordable housing, 5% for others, 12% for commercial
- GST Exemption on Ready Properties, Land, Or Resale
- State-wise stamp duty/registration is extra
- ITC is not available to developers under 1%/5% regimes
Final Word
GST in this case is not the villain, but it might increase the price you pay without you even realizing it! Always do the math. And if you still have questions, ask a legal or real estate expert before booking. Or better—call Shopertyy. We save you from all this and match you with properties where exactly what you see is what you pay.
