By implementing GST, the Indian government has brought a unified tax regime to the industry. By 2025, GST on under-construction properties will be 1% for affordable housing and 5% for non-affordable housing. GST does not apply to ready-to-move-in properties, nor does it apply to resale flats. Homebuyers are likely to appreciate these exemptions. Recent “GST 2.0” reforms introduced lower tax slabs and reduced GST on construction materials, likely to lower the prices of properties. This guide provides all the information on the real estate GST in India, which will help you see how it is calculated and how it affects your property purchase.

Navigating Real Estate GST in India: The Ultimate 2025 Guide

Understanding the implications of the Goods and Services Tax (GST) is essential for all stakeholders in the real estate markets, including homebuyers, real estate developers, and investors. The introduction of GST, especially the later updates included in what was termed “GST 2.0” in 2025, was a longstanding reform. The effects of such reforms in the real estate sector and the taxation of properties are important for avoiding misinformed decisions. This resource helps such stakeholders familiarize themselves with the complex and evolving property taxation system in India and the implications of the recent tax amendments for various property types.

What is GST on Real Estate? A Quick Overview

Before the implementation of GST, the real estate industry faced a complex structure of tax comprising VAT, Service Tax, Stamp Duty, and Registration Charges, amongst other taxes. GST was meant to (operator), consolidate these various taxes into a more comprehensive, clear, and simplified tax structure for GST on property-related transactions. 

GST is a tax levied on the sale of properties that are still under construction and considered a “supply of service”. It is also imperative to note that GST has not replaced stamp duty and registration charges, which continue to be charged by state governments

Latest GST Rates on Property in India for 2025

The GST Council has updated the tax rates for the real estate sector, which will improve housing affordability, and also provide assistance and clarity to homebuyers. Below are the GST rates that will be applicable to residential properties in 2025:

GST on Affordable Housing

Properties classified as affordable housing are eligible for a reduced GST rate of 1% with no Input Tax Credit (ITC) for the builder. A property can be classified as “affordable” under the following conditions:

• The Carpet area is of 60 square meters or below in metropolitan cities (Delhi-NCR, Bengaluru, Chennai, Hyderabad, Kolkata, and Mumbai).

• The Carpet area is of 90 square meters or below in non-metropolitan cities and towns.

• The value of the property is a maximum of ₹45 lakhs.

GST on Non-Affordable Housing

Without the ITC, the GST rate is 5% for houses that are still under construction and do not match the requirements for affordable housing.

How to Calculate GST on Property Purchase

Determining the GST on a property purchase can appear to be difficult but in reality it’s quite simple to calculate. One point to note, however, is that GST is not charged on the total property value. It will only be charged on the construction value as the value of vacant land is exempt from GST. 

For calculation purposes, the Indian government has determined that from the total property value, one-third will be the value of the land. Thus, GST is levied on two-thirds of the total property value.

Here’s a simple example:

• Total Property Value: ₹60,00,000
• Value of Land (1/3rd): ₹20,00,000 (Exempt from GST)
• Construction Value (2/3rd): ₹40,00,000 (Taxable Value)
• GST Rate (Non-Affordable): 5%
• GST Payable: 5% of ₹40,00,000 = ₹2,00,000

So, the total cost of the property would be ₹60,00,000 + ₹2,00,000 = ₹62,00,000 (plus stamp duty and registration charges).

GST on Different Types of Properties

The applicability of GST varies depending on the type and status of the property. Here’s a breakdown:

Does GST Apply to Ready-to-Move Houses?

No, GST does not apply to ready-to-move homes. If a property has a Completion Certificate (CC) or Occupancy Certificate (OC) at the time of sale, it is considered a ready-to-move-in home and is exempt from GST. This is because selling an already completed property is in the nature of the transfer of immovable property, not a supply of service.

Is GST Applicable on Resale Flats in India?

Similar to ready-to-move properties, GST is not applicable on resale flats in India. Since a resale flat is a completed property and has already been occupied, its sale does not attract GST.

What is the GST Rate on Under-Construction Flats in India?

As mentioned earlier, the GST rate on under-construction flats in India is:

• 1% for affordable housing.
• 5% for non-affordable housing.

GST on Commercial Property in India 2025

The GST rates for commercial properties are different from those for residential properties. As of 2025, the following rates apply:

• Sale of under-construction commercial property: 12% with ITC.
• Renting or leasing of commercial property: 18%.

The Impact of GST 2.0 Reforms on the Real Estate Sector

The Indian government has implemented “GST 2.0” reforms, starting from September 22, 2025, which aims to encourage economic growth and further simplify the tax system. Notable reforms to the real estate sector involves:

Simplification of Tax Structures: Not four, but two tax rates are now to be applied- 5% and 18% with a 40% demerit rate for luxuries.

Lowering the GST for Construction Materials: GST for essential construction materials, including cement, has been lowered from 28% to 18%. This encourages higher construction savings of 3-5%. And, many developers are likely to to pass savings to buyers, thus reducing the cost of homes.

The above changes show a shift for a more affordable housing with less opaqueness in the real estate sector. This improvement is commendable.

Conclusion: Key Takeaways for Homebuyers

Purchasing Real Estate in India – Key Points for 2025

In 2025, here are the important points to remember:

• Buying a property which is still in the process of construction and is non-affordable, is 5% and 1% is for affordable properties.
• GST is not applied on completed, resale and ready to move properties.
• For the purpose of GST, 2/3 of the total property value is considered.
• GST 2.0 construction reforms will reduce costs, thus, construction will cost less.

Buyers should understand all the components of the property’s cost, as well as the applicable taxes. Always request a documented cost breakdown from the developer, including GST, to assess your financial position.