Understanding GST for an under-construction property in 2025

Buying an under-construction property can offer several advantages — from better pricing to newer amenities. However, many buyers overlook one critical component: GST (Goods and Services Tax). Introduced to bring tax uniformity across India’s real estate sector, GST still applies in 2025, especially for properties not yet handed over. Here’s what you should know:

1. What is GST in Real Estate?
GST is a consumption-based tax applicable on the supply of goods and services. In real estate, it applies to the sale of under-construction properties but not to ready-to-move-in homes (where Completion Certificate is already issued).

2. GST Rate in 2025 for Under-Construction Homes
As of 2025, GST on under-construction residential properties stands at:

• 5% without Input Tax Credit (ITC) for non-affordable housing
• 1% without ITC for affordable housing projects
  This rate applies to the basic sale price, excluding stamp duty, registration, and other charges.
  

3. What Qualifies as Affordable Housing?
To benefit from the lower 1% GST slab, a property must meet the following criteria:

• Carpet area up to 60 sq.m. in metros (90 sq.m. in non-metros)
• Value capped at ₹45 lakh
  If your property meets these standards, it qualifies for the affordable housing rate.
  

4. GST Is Not Applicable On:

• Fully constructed properties with Completion Certificate
• Land value (GST applies only on the construction component)
• Resale properties (as they are treated as “sale of immovable property,” not a service)
  

5. Should You Worry About No Input Tax Credit (ITC)?
Earlier, builders could claim ITC on construction costs and pass on the benefit. Now, GST is charged at a reduced flat rate without ITC. While this means fewer surprises for the buyer, it also limits the builder’s tax offset flexibility — which could affect pricing structures indirectly.

In Summary
Understanding GST helps you plan your finances better when investing in an under-construction property. Always ask your builder for a GST breakup and confirm if the quoted price is inclusive or exclusive of tax. With this clarity, you can avoid post-booking shocks and make a fully informed decision.