GST on Commercial Property: Tax Rates, Rules and Exemptions in India 2025

Goods and Services Tax (GST) started in India on the 1st of July, 2017 to simplify indirect taxes. GST on commercial property applies to renting, leasing or buying under construction spaces. As per the new GST rate, commercial rent or lease attracts 18%, under construction sales are charged 12% with ITC, and completed or ready to move properties are exempt ( 0% GST). The GST rate on commercial property depends on the type of transaction. Businesses can claim Input Tax Credit (ITC) on construction and related services, lowering overall tax costs. This makes real estate taxation more transparent and removes the burden of multiple state and central taxes. Owners, investors, and tenants benefit from easier compliance and reduced cascading taxes. 

GST Rates on Commercial Property

Understanding the GST rate [1] on commercial property is important for buyers, tenants and investors. The rules for GST on the sale of commercial property depend on the property type and the transaction stage. The table below will show the details of GST prices:

Property Type	GST Rate	Applicability
Under-construction commercial property	12% [2]	Sale of offices, shops, or spaces still under construction
Renting or leasing commercial property	18%	Rental income from shops, offices, or warehouses
Completed / ready-to-move property	0%	No GST – only stamp duty & registration charges apply

Applicability of GST on Commercial Property

GST affects how money is handled when dealing with commercial properties. Here’s a simple breakdown:

• GST on Rent Paid on Commercial Property: If you own a building and rent it out for business purposes, like stores or offices, you must add 18% GST [3] to your rental rent. This is required by law if the annual rental income exceeds ₹20 lakhs. 
• GST on Commercial Property Sales: For an under-construction commercial property, 12% GST [4] applies, and you can claim input tax credit on construction expenses. For a completed commercial property, no GST is charged; only stamp duty and registration fees apply.  

GST Registration and Compliance for Commercial Property

Handling GST for commercial properties is key. Here’s a simple guide for property owners:

• When to Register for GST: If your rental income is more than ₹20 lakh a year (₹10 lakh for particular category states), you must register for GST. This is important for following the law.
• Giving Proper Invoices: Whenever you collect rent, you must give your tenants a GST-compliant invoice. This invoice should clearly display the GST amount, typically 18% of the commercial rent. 
• Collecting and Sending GST: As a landlord, you should charge GST on the rent, collect it from your tenants, and then pay the government this amount.
• Using Input Tax Credits: You can claim input tax credits for the GST you have paid on expenses related to your property. This can help reduce your costs.
• Commercial Property Purchase GST: When buying an under-construction commercial property, 12% GST applies, while completed properties are exempt from GST; only stamp duty and registration charges are applicable

GST on Commercial Property Rent

When renting out commercial spaces, the landlord must charge 18% [5] GST on commercial property rent as per the law. Tenants using the property for businesses can claim the Input Tax credit, reducing tax liability. This ensures compliance and smoother financial management.  

GST on Commercial Property Purchase in India

When you sell commercial properties, knowing the correct GST rates is essential for ensuring legal compliance and managing your finances effectively:

• GST for Under-Construction or Newly Built Properties: If you are dealing with properties that are not yet completed or have just been constructed, you must apply a 12% GST [6] on the transaction. This rate is mandatory and should be factored into the pricing and invoicing processes by the developers or sellers.
• Exemption for Fully Constructed Properties: Once a commercial property is fully built and is being sold as a resale, no GST is required on the sale. This exemption simplifies the sales process and makes these properties more financially attractive to potential buyers.
• Claiming Input Tax Credits: Developers can offset some of the costs associated with construction. They can get credits for the GST spent on purchases related to construction. This can reduce the monetary burden on developers by allowing them to recover a portion of the GST expended on materials and services.

GST on Commercial Property Construction

GST on commercial property construction ensures transparency and standard tax rates, and benefits for developers and buyers in under-construction projects.

• GST Rate: Under construction commercial properties attract 12% GST [7]. Completed or ready-to-move properties are exempt, with only the stamp duty and registration charges applicable. 
• Input Tax and Credits: Developers can claim Input Tax Credit (ITC) on GST paid for construction materials and services, reducing overall cost and improving affordability.

Impact of GST on Commercial Property Transactions

GST changes how we handle commercial property deals:

• Clear Rules Make Things Clearer: GST helps everyone understand the taxes involved in property transactions, making the entire process more transparent and easier to comprehend.
• Necessary for Rental Talks: When people agree to rent commercial spaces, they must consider GST. This is important because it affects how much money is exchanged.
• Developers Need to Plan for GST: People who build commercial properties must include GST when figuring out their costs. This ensures their pieces are correct and include all the taxes they must pay.

Exceptions and Exemptions

In some cases, not all commercial properties have to pay GST:

• GST Free Options: Certain properties, like medical facilities or charity-run buildings, are exempt from GST. This means 0% GST, helping essential services lower their operational cost.
• Selling as a Growing Concern: When selling a whole business along with its property, the transfer is exempt from GST. This makes business sales smoother and avoids extra tax charges.
• GST on construction of commercial property: While under-construction properties attract 12% GST, some government-approved affordable housing or public utility projects may qualify for exemption or reduced rates, easing cost for developers and end users.

How GST Impacts Property Pricing and Affordability? 

GST influences property prices by adding taxes on transactions, offering input tax credits, and shaping overall affordability for buyers, tenants and developers.

• Higher cost initially: GST on under-construction properties (12%) and rent (18%) can raise upfront costs for buyers and tenants.
• Relief Through ITC: Developers can claim input tax credits on construction expenses, helping reduce project cost and balance property prices.
• Affordable Resale Properties: Completion of resale properties attracts no GST, making them more affordable compared to new, under-construction properties.

Recent Updates and Amendments in GST for Real Estate

Recent GST changes in 2025 simplified tax rates, clarified exemptions, and updated rules for commercial property, making compliance easier for owners and buyers. 

• GST rates are now mainly 5% [8] and 18%, replacing older multiple slabs, to keep things simpler for real estate transactions.
• GST exemption on commercial property applies to fully completed buildings, while under-construction projects still attract GST as per the latest rules.
• Input Tax Credit Rules have changed, making it harder for landlords and tenants to claim benefits on some commercial property transactions.

NoBroker Makes GST on Commercial Property Easy

Dealing with GST on commercial property can be complex, but NoBroker is here to help. NoBroker legal services help you understand and manage GST for your commercial properties. Whether you are buying, selling or leasing, our team ensures you follow all GST rules. Reach out to NoBroker for straightforward guidance on all your property legal needs, making your real estate transactions easier. 

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