Residential Property GST Rate : Comprehensive Guide to GST Rates on Residential Property in India

What is GST on Residential Property – It is applicable only for Under Construction Properties. Occupancy Certificate (OC) homes or residences have zero GST rate applicable and are completely exempted. The rates in the following table are based on the housing category and are a tax that cannot be claimed against input tax:

Affordable Housing: 1% GST. Applicable to Properties Less than ₹45 Lakh where Carpet area is up to 60 sq. meters in metros or 90 sq. meters in non-metro cities.

Standard Housing: 5% GST. Applicable on all other residential projects which are still under construction and are above ₹45 lakh.

Related Property Transactions:

Resale Flats: 0% GST (exempt).

Residential Rent: No GST on rent to persons for residential accommodation. But, if the residential unit is let out on rent to a registered corporate/business entity then an 18% GST applies.

Maintenance Charges: No exemption if annual turnover of Society is more than ₹20 lakh or maintenance is over ₹7,500/month/individual. If it crosses both, a GST of 18% is imposed on the entire sum.

Under-Construction Residential Property Slabs

So excluding companies owning their own property, the government of India divides all residential purchases into two main buckets (both of which are taxed without Input Tax Credit (ITC):

Q. Affordable Housing Slabs : GST Rate: 1%

The Eligibility rules for this minimum 1% rate are:

Maximum property value– The total property deal is limited to ₹45 Lakhs.

Max Size: Carpet area max. meters (approx. 645 sq. You could live up to 90 sq. meter (968.75 sq. meters (approx. 968 sq. ft.) in non-metropolitan cities.

1% Rate on Government Schemes: This 1% rate is also applicable for housing projects at a lower cost being developed under certain public schemes such as the Pradhan Mantri Awas Yojana (PMAY) Scheme.

Q. Non-Affordable (Ordinary & Luxury) Housing Slabs : GST Rate: 5%

Applicability: Any apartment, bungalow or villa which is more than ₹45 Lakh price and/or that exceeds the assigned carpet area limits comes under this category automatically.

Q. Ready-to-Move-In & Resale Residential Flats: GST Rate: 0% (Exempt)

Relevant: When Property is ready make transfer of immovable property while purchasing it with Completion Certificate (CC) / Occupancy Certificate (OC) already obtained by the builder or even if you buy second- hand resale flat In such cases, no GST can appropriately be charged against those transactions; but you are liable still for the usual state stamp duty and registration costs.

Housing Plots / Land Sale : GST Rate: 0% (Exempt)

DONOT DONT THIS: Applicability: Bare land/ Residential Plot purchase/sale transaction falls completely outside the ambit of GST Regime. Even in cases where basic infrastructure had been implemented on the layout such as roads or sewage lines, a pure plot sale does not attract GST.

Important Compliance Notes for Homebuyers

The buyers have no Input Tax Credit(ITC) to avail: The developer nor the end consumer can avail ITC on residential purchases as per current rules. 1% and 5% are summary rates, the final outgoing cost of doing this is handed down to the customers.

1% Income Tax TDS Rule: Please note that for any property deal (affordable or premium) where the overall consideration reaches ₹50 Lakhs or more, the buyer will additionally have to deduct 1% TDS on each instalment payment made to seller by way of form 26QB. This is a Income Tax requirement only and will work absolutely separately to GST.

Housing Society Maintenance Charges — If you are moving in and the cooperative housing society has a total yearly turnover more than ₹20 Lakhs, an 18% GST is levied if your monthly maintenance quote moves beyond ₹7,500 per flat.

Complete Guide on GST Rates on Residential Property in India.

The GST landscape for residential property is highly intricate, and to navigate it successfully, homebuyers, builders and landlords need to have an understanding of the ins-and-outs within this arena. This formatted points-wise guide explains the rules, tax slabs, calculations, & legal exemptions under residential real estate.

GST on Rent of Residential Property

Residential : Residential rent is completely taxable based on tenant’s status and the usage into.

Rented to Unregistered Individual for Personal Use: 0% (Exempt). There will be no GST on flats rented to a salaried individual or unregistered person for use as residence.

For GST Registered Business/Entity: 18% GST under RCM when the property is on rent. Certainly, if a registered firm or company but take a residential flat on rent for either corporate guest house or office purposes or as employee accommodation then the tenant will have to pay the 18% tax directly to government.

Sole Proprietor Exception: If a GST-registered business owner leases/property, as an individual for the private and personal use of her family and does not claim deductible allowances from BIS SC−93 which applies when a tenant to deduct rent from rental activity − that property defends exempt status.

GST on Flats Below ₹50 Lakhs

The properties in the ₹50 Lakh bracket are generally considered to be middle of the road solutions, falling between affordable and luxury housing frameworks:

Flats Costing upto ₹45 Lakhs (Affordable Housing): Attract a concessional GST of 1% without Input Tax Credit (ITC) In order to receive this rate, the carpet area of the flat should also be within 60 sq. m. in metro cities or 90 sq. m. in non-metros.

Apartments Worth between ₹45 Lakhs and ₹50 Lakhs: Even if the total property agreement value exceeds ₹45 Lakhs by just one rupee, it moves up into 5% GST slab (Non-Affordable) without ITC.

The TDS Quirk: Please note that any flat worth ₹50 Lakhs or more, has to deduct 1% Tax Deducted at Source (TDS) under Section 194-IA of the Income Tax Act, as payment for the builder. This operates independently of GST.

Residential Property GST Rate India: Master Summary

Change of use of residential property purchased by builder to commercial; tailor-made for GST developer

Sale of an apartment structure that is still under construction — This is treated as a supply of service when a developer sells an apartment structure that has not yet been completed:

Phased Collection-The builder is the collecting agent. They levy a 1% or 5% GST on the installment invoices based on the construction milestones.

Advance Payments: GST is legally charged on the first booking/token amount for registration of the flat.

No Passthrough ITC: For residential buyers, since builders cannot pass on raw materials tax credits (on steel, cement etc) due to the implementation of GST from 1st October 2019, the outgo rates of 1% and even Higher rate of 5% are going to be Flat costs with no offsetting.

GST on a Flat Purchase – How to Escape the GST?

Here are some effective strategies that buyers can use in order to lower their tax outgo legally.

Book Ready-To-Move-In Inventory – The simplest way is to purchase an apartment already possessing a Completion Certificate (CC) or Occupancy Certificate (OC) from the local authority. GST is not levied on ready flats.

Choose Resale Properties — If you buy from a sale layer in the secondary market, by default the property is considered pre-owned and therefore the GST net applies to you.

Buy Plots/Land: Buy a residential land or plot in layout instead of under construction building because it is completely exempted from GST.

Components of GST on Residential Flats

While going through any builder’s cost sheet, always keep in mind that GST is not uniform across components:

Construction Component: 1% or 5% whichever is applicable based on affordability

Preferential Location Charges (PLC) & Internal Infrastructure: PLC and charges for common areas such as a park-facing view or floor rises, place to park your vehicle are amalgamated with the main construction service and levied at 1% or 5%.

Clubhouse Membership Fees: Typically taxed at standard service (billable as a separate administrative facility rather than bundled construction) rates of 18%.

Affordable Housing GST Rate Notification

The lower tax structure for the affordable housing was notified by Ministry of Finance through Notification No. 11/2019-Central Tax (Rate). This historic amendment replaced the dated 8% tax rate (with ITC) system with the new definitive 1% system (without ITC) to lessen the impact of excise/ GST burden on bottom-end consumers.

Residential Property GST Rate Calculator

There is no calculation for the land value deduction separately, as the 1% and 5% rates already included in-built calculations for a land component hence residential GST will be calculated on the entire agreement value.

Calculation Formulas:

• For Affordable Flats: $\text{GST Amount} = \text{Agreement Value} \times 1\%$

• For Premium/Luxury Flats: $\text{GST Amount} = \text{Agreement Value} \times 5\%$

Practical Example:

Suppose you purchase an under-construction premium apartment in Gurugram for ₹80 Lakhs.

• Property Status: Non-Affordable (Value > ₹45 Lakhs)

• Applicable GST Rate: 5%

• Calculation: $₹80,000,000 \times 0.05 = ₹4,00,000$

• Total Cost Payable to Builder: ₹84,00,000 (plus applicable stamp duty and registration fees).

Commercial Property GST Rate

The Complete GST Rules & Rates on Commercial Property in India for the Master Guide.