Buying a property is one of the most important financial decisions that an individual makes in their lifetime. For some individuals, it is their life’s goal, for others, it is a legacy, and for some, it is an investment. The journey of buying a property in India is paved with complex legal and tax formalities that can be daunting even for the most prepared buyer. One such area of confusion is the applicability of Goods and Services Tax (GST) on the registration of such property. A buyer comes across many questions while registering a property, such as:
Is GST payable on all types of property?
Does it apply to registration or only during construction?
This blog is an answer to such questions as it provides a clear understanding of how GST impacts flat purchases, registration, and compliance in 2025, so you can make well-informed and lawful real estate decisions.
GST in Real Estate
The Goods and Services Tax (GST) was introduced in India on 1st July 2017, which has unified fragmented taxes into one. It has replaced multiple state and central taxes, including VAT, service tax, and excise duty, thereby streamlining the overall tax structure. In the context of real estate, GST applies to the supply of services, including construction services provided by builders and developers. However, not all property transactions are subject to GST. GST is payable depending on:
- The stage of construction at the time of sale
- Whether the property is residential or commercial
- Whether it is a new property or a resale
- Whether the Completion Certificate (CC) has been issued before the transaction
Is GST Charged on Property Registration?
This is a widespread confusion among a lot of people about GST. The reality is that GST is not charged while registering a property. The registration of property involves executing a sale deed and recording the transaction at the sub-registrar’s office, which does not fall under the purview of GST. Instead, stamp duty and registration charges are levied by the respective State Governments, not the Central government.
GST is applicable only in certain property transactions, specifically under-construction projects.
When Does GST Apply to Property Transactions?
GST is applicable when:
- You are purchasing an under-construction residential or commercial unit from a builder or developer.
- The Completion Certificate (CC) has not yet been issued at the time of the agreement or sale.
- The sale involves construction services or a composite supply (land + construction).
GST is Not Applicable When:
- You purchase a ready-to-move-in property, i.e., a property where the builder has already received the Completion Certificate.
- You purchase a resale property from an individual owner (secondary sale).
- You buy a plot of land without any construction services.
GST on Flat Purchase in 2025
| S. No. | Category | Property Details | GST Rate | Input Tax Credit (ITC) |
| 1 | Under-Construction Flats (General) | All residential flats are currently under construction, except for the affordable housing units. | 5% | Not available (since April 2019) |
| 2 | New Flats (Under Construction) | Flats booked before the issuance of the completion certificate. | 5% | Not available |
| 3 | Affordable Housing (Below ₹45 Lakhs) – Metro | Carpet area up to 60 sq. m.; price ≤ ₹45 lakhs | 1% | Not available |
| 4 | Affordable Housing (Below ₹45 Lakhs) – Non-Metro | Carpet area up to 90 sq. m.; price ≤ ₹45 lakhs | 1% | Not available |
| 5 | Flats Priced Above ₹50 Lakhs | Under-construction property exceeding the ₹45 lakhs limit | 5% | Not available |
| 6 | Ready-to-Move-in Flats | Flats with valid occupancy or Completion Certificate | Not Applicable | Not Applicable |
| 7 | Incomplete Interior Work in Flats | If interior work is ongoing and CC/OC has not been obtained | 5% or 1% (as applicable) | Not available |
Old vs. New GST Scheme for Developers
For projects that were under development before April 1, 2019, developers had the option to choose between:
- Old Scheme: Higher GST rates (8% for affordable housing, 12% for others) with Input Tax Credit
- New Scheme: Lower GST rates (1% and 5%) without Input Tax Credit
For new projects launched after April 1, 2019, the new scheme with lower GST rates and no ITC is compulsory.
Input Tax Credit (ITC)
Under the GST law, the builders could initially avail of Input Tax Credit (ITC) on goods and services used in construction. However, under the revised rates post-2019:
- ITC is no longer available for residential real estate under the 1% and 5% rates.
- Builders who are opting for the old regime may claim ITC, but it comes with limitations.
For homebuyers, this means that you cannot claim any GST refund or credit. The GST paid becomes part of your total purchase cost.
GST on Plot Purchases
GST is not applicable to the sale of land alone. This is because land is not treated as a supply under GST. However, if a plot is sold along with construction services, such as a villa on a plotted layout, GST is applicable only to the construction component of the sale.
So, when you buy a plot of land along with a building or house being constructed on it, the total price you pay includes two parts:
- Price of the land
- Cost of constructing the building (like a house or a villa)
According to GST rules:
- GST is not applicable on land, but
- GST is applicable to the construction service
So, the builder must separately show how much you are paying for:
- The land on which no GST is charged, and
- The construction on which GST is charged at 1%, 5%, or 5% for commercial, as applicable
If the builder does not separate the values, the entire amount may be subject to tax.
GST in Joint Development Agreements (JDAs)
In many real estate projects, landowners and developers enter into Joint Development Agreements, where the landowner provides land and the developer builds the property. In such cases,
- GST is only applicable to the transfer of development rights.
- The developer is liable to pay GST under the reverse charge mechanism (RCM) on such rights or FSI (Floor Space Index).
Can You Claim a Refund on GST Paid?
In general, homebuyers cannot claim a refund of the GST paid on their under-construction property. GST becomes part of the purchase price. However:
- If the builder cancels the booking or the project is not completed, a refund may be claimed by the builder and passed on to the buyer after adjusting dues.
- In such cases, the buyer should obtain a cancellation deed and seek reimbursement of the GST component.
Conclusion
For homebuyers, it is essential to understand that GST is not charged on registration itself. Instead, it applies to under-construction properties sold by builders before issuance of the Completion Certificate at fixed rates depending on the nature and price of the unit. If you are buying a ready-to-move-in flat or a resale property, you don’t have to worry about it at all.
Don’t let tax jargon cloud your decisions. Take the time to check whether GST applies in your case, review the documents, and consult a professional if something seems unclear. A little awareness can go a long way in making your homebuying experience transparent, lawful, and stress-free.
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