Buying an under-construction property involves more than paying the agreed sale price. Along with the base property cost, a homebuyer may have to account for GST, stamp duty, registration charges and other transaction-related expenses.
For residential properties, GST treatment depends mainly on whether the property qualifies as affordable housing and whether the sale is taking place before or after the property reaches the completion stage.
If you are planning to buy an under-construction flat or apartment, understanding GST on under-construction property in India can help you estimate the actual cost of the purchase and check whether the GST amount charged by the builder is correct.
This guide explains the applicable GST rates, how GST is calculated, when GST is not payable, and what buyers should check in their builder’s invoice.
Introduced in 2017, GST subsumed various indirect taxes into one unified system. When it comes to real estate, the government levies GST only on under-construction properties, not on ready-to-move-in homes.
Initially, GST on under-construction properties was charged at 12%, but after the 33rd GST Council amendment, it was revised:
Note: No GST is applicable if the property has received a completion certificate.
To calculate GST, remember that land cost is exempted. Only two-thirds of the total property value is considered taxable.
Formula:
GST = (Total Property Value × 2/3) × Applicable GST Rate
If the builder has received a Completion Certificate (CC), you don’t have to pay GST.
If you’re investing in a shop, office, or any other commercial space, you’ll be charged 12% GST.
Builders should not charge GST on the land component. Ensure it is excluded.
These are mandatory and separate from GST. Usually, they add 5%-7% more to the total cost.
Some builders agree to absorb GST, reducing your overall property cost. Always ask.
However, remember:
GST is charged on construction milestones. Delay in payment can result in penalties.
Always get a GST invoice from the builder that includes:
Ensure that the builder is registered under GST and is depositing the tax collected from you.
Receipts serve as proof during disputes or income tax returns.
Not really, but affordable housing gets major relief:
Also, government housing schemes like PMAY (Pradhan Mantri Awas Yojana) offer GST benefits to EWS and LIG segments.
GST is an important part of the cost calculation when buying an under-construction property in India. But the correct GST amount cannot be determined by looking at the property price alone.
Before booking, check:
A few minutes spent checking these details can prevent confusion later and give you a much clearer picture of the real cost of your property purchase.
Disclaimer: The information presented in this article is compiled from publicly available sources and media reports and is provided solely for informational purposes. It should not be considered official financial, legal, or regulatory advice. Any images, addresses, or related details are shared in accordance with publicly available information and reporting practices, without any intention to infringe upon personal privacy.
Subscribe now and be the first to receive insights that matter.
Home Loan EMI Calculator
