GST on Purchase of Residential Property: Tax Rates and Exemptions Impact on Buyers in India

Understanding GST on Purchase of Residential Property is important for every homebuyer in India. Introduced in 2017, GST applies only to under-construction properties, while ready-to-move and resale homes are exempt. Knowing whether your flat, villa, or plot attracts GST can help you avoid hidden costs and plan better financially. This blog explains GST rates, exemptions, and how it affects buyers when purchasing residential property in India.

Current GST Rates on Residential Property

Understanding GST rates helps buyers plan their finances better. Below is a detailed table summarising GST rates across different property categories, resale scenarios, and additional costs.[1]

Category / Item	GST Rate	ITC (Input Tax Credit)	Notes / Applicability
Affordable Housing (under-construction)	1%	No ITC	Price up to ₹45 lakh; Carpet area ≤ 60 m² (metro) / ≤ 90 m² (non-metro).
Non-Affordable Housing (under-construction)	5%	No ITC	Properties above ₹45 lakh.
Villas / Independent Houses / Flats (under-construction)	5% (if non-affordable) / 1% (if affordable)	No ITC	Same rules as above, depending on the definition of affordability.
Parking, Clubhouse & Amenities (bundled with property)	18%	Not Applicable	Applies when these are sold as part of an overall package.
Resale Property	0%	Not Applicable	Only stamp duty & registration fees apply, no GST.
Ready-to-Move / Completed Property (with Occupancy Certificate)	0%	Not Applicable	Considered immovable property, not subject to GST.
Other Costs (Maintenance / Society Charges, etc.)	Varies (generally 18%)	Not Applicable	Applicable if society turnover > ₹20 lakh per year.
Affordable Housing Definition	—	—	Homes up to ₹45 lakh; carpet area ≤ 60 m² in metros / ≤ 90 m² in non-metros. [1]

For basics, you can read more in Nobroker’s guide: Getting Started with GST.

GST Applicability on Residential Property

GST is levied on amenities like parking, clubhouse, or maintenance services if these charges are included in the builder’s invoice. On the other hand, GST does not apply to resale homes, where buyers are only liable to pay stamp duty and registration fees. Similarly, ready-to-move-in properties are exempt, as the issuance of a completion certificate classifies them as immovable property, placing them outside the scope of GST.

The GST on Purchase of Residential Property applies only to under-construction homes. Buyers must pay 1% GST on affordable housing and 5% on non-affordable housing. However, ready-to-move and resale properties are exempt since they already have an occupancy certificate. Plots of land are also outside GST’s scope. Knowing these rules helps homebuyers plan costs wisely.

Learn more about this distinction in GST on Real Estate.

Difference Between Affordable and Non-Affordable Housing

The impact of GST varies by housing category. [1]

Category	Price Limit	Carpet Area Limit	GST Rate
Affordable Housing	≤ ₹45 lakh	60m² (metro) / 90m² (non-metro)	1%
Non-Affordable Housing	> ₹45 lakh	No limit	5%

Input Tax Credit (ITC) Rules for Homebuyers

Under the GST system, Input Tax Credit (ITC) enables businesses to mitigate their tax obligations by claiming credit for the GST already paid on goods or services used in their operations. ITC works seamlessly for businesses, but not for residential property. Homebuyers are unable to claim ITC on GST remitted for property purchases.

After the 2019 reforms, the government reduced GST rates on residential properties—1% for affordable housing and 5% for non-affordable housing—but removed the ITC benefit. Before this change, rates were higher at 8% and 12%, but buyers could offset tax liabilities using the ITC. The new structure is simpler and more affordable upfront, but since ITC is not available, the GST you pay as a homebuyer is considered final and non-refundable. [2]

For more, check: GST on Construction.

GST on Residential Property for Different Scenarios

Scenario	GST Applicable?	GST Rate
Buying an under-construction property from a builder	Yes	1% (affordable), 5% (non-affordable)
Resale property purchase	No	0%
Ready-to-move-in homes	No	0%
Plot + construction contract	Yes, on the construction contract only	18% (on services)

This helps you understand GST on the purchase of a new residential property under different cases. [4]

GST vs Stamp Duty & Registration Charges

It’s important to note:

• GST is a central tax on under-construction properties.
• Stamp duty & registration charges are state levies and apply to all property transactions.
• Even if GST doesn’t apply (resale/ready homes), stamp duty & registration must be paid.
• To simplify paperwork, buyers often need affidavits and notary services. 

Explore: Offences and Penalties under GST to avoid mistakes.

Documents Required for Property Registration & GST Compliance

• Sale Agreement/Builder-Buyer Agreement
• Completion/Occupancy Certificate (if applicable)
• GST invoice from builder (for under-construction)
• Identity & Address Proofs
• Builder’s GSTIN & project registration details
• Stamp duty & registration fee receipt
• Affidavit/Notary (if required for disputes or clarification)

Legal Risks & Penalties

• If a builder wrongly charges GST on exempt properties, buyers can demand refunds.
• Incorrect classification of projects can result in penalties. [3]
• Delays in tax compliance can invite fines and interest.

Learn about penalties in detail here: GST Offences and Penalties.

How can Nobroker help with Legal Services?

Buying property can be complex, especially with the frequent changes to GST rules. Nobroker provides legal services for:

• Property agreement reviews
• GST & stamp duty compliance checks
• Drafting affidavits, notary services, and dispute resolution
• Transparent advice without hidden broker charges

This makes your journey of paying the GST on residential property purchase smoother and stress-free.

Frequently Asked Questions