GST Rates on Real Estate
Real estate has been considered as one of the important pillars of Indian economy. Just like other sectors, Indian Government has applied GST on real estate sector as well. The sale or transfer of properties that are still under development is subject to GST.
While purchasing such under-construction properties, investors and homebuyers are required to pay it. Only properties that are still in the building phase are subject to the GST charge. This means that there will be no GST charged on finished or ready-for-sale properties that holds a valid Completion Certificate.
GST Rates on Real Estate
Given below are the GST rates on Real Estate, effective from 1 April 2019
Real Estate Property | GST Rate |
Commercial properties | 12% |
Residential property (Affordable housing) | 1% |
Residential property (non-affordable housing) | 5% |
What is Affordable Housing under GST?
The Indian government has a vision for accessible housing. It aspires to give all of the nation's citizens access to housing. According to the plan, a property must meet the following requirements in order to be eligible for affordable housing:
- In either urban or rural areas, the total property worth must be less than or equivalent to Rs.45,00,000.
- In towns and cities that are non-metropolitan, the total carpet area of residential property must be less than or equal to 90 square meters.
- In urban areas, the total carpet area of residential property must be less than or equal to 60 square meters.
Construction Materials GST Rates
Below mentioned are various GST rates on various construction materials used to build a property -
Construction Material | GST Rates |
Marble Rubble/Crude Granite | 5% |
Building bricks | 5% |
Roofing Tiles | 5% |
Fly Ash Blocks | 5% |
Natural Sand used for construction | 5% |
Marble / Granite Blocks | 12% |
Glass that are used for construction purposes | 18% |
Tiles/Refractory bricks | 18% |
Structural components for building that are prefabricated | 18% |
Granite/Marble (other than blocks) | 18% |
Slag cement/Portland | 28% |
In addition to the aforementioned building supplies, the details of the GST charged on the construction services utilized to build the qualified houses are provided below:
Key Construction Material | GST Rates |
Under construction properties under Credit Linked Subsidy Scheme | 8% |
Composite supply of works contract for affordable housing | 12% |
Properties that are under construction (apart from those that are under Credit Linked Subsidy Scheme) | 12% |
Composite supply of works contract to bodies of local government or government agencies | 12% |
Works Contract (other than govt. bodies) | 18% |
Composite supply of works contract (other than affordable housing/local government bodies/government agencies) | 18% |
GST Impact on Real Estate
GST has a variety of effects on the Indian real estate market, some of which can be explored in relation to affordable homes, luxury properties, properties that are still under development, as well as registration fees and stamp duty fees. Because of how the GST has affected affordable housing, these properties are now taxed at the lowest GST tax rate of 1%. The buyers have directly benefited as a result of this. The lower tax rate for luxury properties has led to greater savings on the part of the property owners. The updated GST rate that applies to opulent residences is 5%. Therefore, the input tax credit is not available for such rates to be applied.
Points to Remember About GST on Real Estate
Here are a few points that you should remember about GST on real estate -
- According to GST laws, any residential property with a maximum of 15% commercial space will be classified as residential property.
- According to the GST tax structure, a commercial unit is subject to a 12% GST.
- Landowners are only required to pay GST if the tenant is a commercial firm, according to GST laws.
- In addition, GST is charged on services related to house loans, such as processing fees, legal fees, etc.
FAQs on GST Rates on Real Estate
- What are the stamp duty and registration fees for real estate transactions?
One percent of the property's worth is charged in registration fees at the time of registration. The poverty-related stamp duty rates range from 5% to 10%.
- What is the GST rate that applies to affordable housing?
In the case of affordable housing, the GST rate is 1%.
- What is the GST rate for commercial real estate?
GST on commercial premises is charged at a rate of 12%.
- What does a residential real estate project mean?
A real estate project where the commercial area’s carpet area is less than 15% when compared to the apartment’s carpet area is known as a residential real estate project.
- Does one pay GST for a single residential house?
If the purchase of the single residential area is done before getting a completion certificate, then one needs to pay the GST. However, if the completion certificate was obtained prior to the purchase, then GST is not needed to be paid.
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