GST on flat purchase from a builder depends on the stage and type of flat: an under construction affordable flat carries 1% and any other under construction flat carries 5%, both without input tax credit to the builder. A ready to move flat sold after the completion certificate is issued carries no GST at all, and neither does a plot of land.
The 1% and 5% apply only to two thirds of the price, since a third is deemed to be land, so the tax on the full price is lower than the headline rate. This page explains the affordable test, a worked example, ready flats, resale and the common questions buyers ask. Rented property is on the rent page.
Flat and property purchase: codes and GST rates
Item / SAC / GST- Affordable flat, under construction, from a promoter1% (no ITC)Up to 60 or 90 sq m and Rs 45 lakh
- Other residential flat, under construction5% (no ITC)All other flats in a project
- Ready flat after completion certificateNot a supplyNo GST, stamp duty only
- Resale of a flat by an ownerNot a supplyNo GST
- Plot of landNot a supplyLand is outside GST
- Commercial units in a residential project18%Usual rate; some cases differ, check the entry
- Construction of a house by a contractor18%Works contract
- Preferential location and parking charges1% or 5%Usually part of the flat price
Quick facts
SAC
9954: construction servicesAffordable flats
1% without input tax creditOther flats
5% without input tax creditLand deduction
One third of the price treated as landReady to move flats
No GSTAffordable test
Carpet area up to 60 sq m (metros) or 90 sq m (others) and value up to Rs 45 lakh
Gst on flat purchase: rate table
| Purchase | GST |
|---|---|
| Under construction affordable flat from a promoter | 1% (no ITC) |
| Under construction other flat from a promoter | 5% (no ITC) |
| Ready flat with completion certificate | No GST |
| Resale flat from an individual owner | No GST |
| Plot or land | No GST |
| Bungalow built by a contractor on your land | 18% works contract |
| Commercial shop in a project | Check the notification |
Gst on flats below 45 lakhs: the affordable test
A residential apartment is affordable if its carpet area is up to 60 square metres in metro cities (Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata and Mumbai region) or 90 square metres elsewhere, and its value is up to Rs 45 lakh. Both conditions must be met. A flat priced at Rs 44 lakh with 70 square metres of carpet area in Mumbai is not affordable and pays 5%.
Worked example
Under construction flat, agreement value Rs 60,00,000, not affordable. Deemed land value (one third): Rs 20,00,000. Value of construction service: Rs 40,00,000. GST at 5%: Rs 2,00,000, which is about 3.33% of the full price. An affordable flat at Rs 40,00,000 would carry 1% on Rs 26,66,667, about Rs 26,667.
Gst on under construction property and ready flats
GST applies only while the flat is under construction, because the builder is supplying a construction service. Once the completion certificate is issued, a sale is a sale of immovable property, outside GST. Payments made before the certificate attract GST even if the rest is paid after. Stamp duty and registration are state levies and apply in both cases.
Gst on commercial property
Commercial units in a real estate project and offices bought from a builder have their own entries in the services notification, and the rate and credit rules differ from residential flats. Check the current entry before you pay. Renting commercial property is 18%; see rent.
How to avoid gst on flat purchase
GST cannot be avoided legally on an under construction flat. Buyers who want to pay no GST buy a ready flat after the completion certificate or a resale flat. The trade off is price and availability. Do not agree to undocumented cash payments to cut tax; they leave you without proof of payment.
Builders, credit and other charges
Builders charging 1% or 5% cannot take credit of GST on cement, steel and contractors; see cement and construction materials. Parking, club membership and preferential location charges collected with the flat price normally go with the flat and take its rate. Maintenance deposits and society charges collected later are separate.
Property rates on this page summarise the real estate entries in broad terms. The affordable test, land deduction and commercial unit rules have conditions, so read the current notification on the GST portal and get advice from a GST practitioner or chartered accountant before signing an agreement.
Frequently asked questions
What is the GST on flat purchase from a builder?
1% for an affordable flat and 5% for others, if bought before the completion certificate. One third of the price is treated as land.
Is GST charged on ready to move flats?
No. A flat sold after the completion certificate carries no GST.
What is the GST on flats below 45 lakhs?
1% if the flat is also within 60 square metres carpet area in a metro or 90 square metres elsewhere. Otherwise 5%.
Is GST charged on resale flats?
No. A resale flat sold by an owner is not a supply under GST.
Is GST charged on plots of land?
No. Sale of land is outside GST.