GST Rate on Under-Construction High-Rise Apartments in India

GST Rate on Under-Construction High-Rise Apartments in India 2025 Guide

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GST Rate on Under-Construction High-Rise Apartments in India (2025 Guide)

Introduction

Planning to buy a high-rise apartment still under construction? Then you’ve probably heard about GST and its impact on your property price. For many buyers, GST can seem complicated, but understanding it is essential to avoid hidden costs. This guide simplifies everything about the GST rate on under-construction high-rise apartments in India, including the latest rates, how it’s calculated, and what you should check before making a payment.

1. What Does GST Mean for Homebuyers?

The Goods and Services Tax (GST) was introduced in 2017 to bring transparency and replace multiple taxes. For real estate, GST applies to under-construction properties because they are considered a service. Once a property receives a Completion Certificate (CC) or Occupancy Certificate (OC), GST is no longer applicable, as the property is then treated as an immovable asset.

2. GST Rates on Under-Construction Apartments in 2025

The GST Council has simplified the tax rates for residential properties, dividing them into two categories—affordable housing and non-affordable housing.

Affordable Housing

  • GST Rate: 1% (without Input Tax Credit)

  • Criteria:

    • Property value up to ₹45 lakh

    • Carpet area:

      • Metro cities: Up to 60 sq. m.

      • Non-metro cities: Up to 90 sq. m.

Non-Affordable Housing

  • GST Rate: 5% (without Input Tax Credit)

  • Applies to properties priced above ₹45 lakh or exceeding the carpet area limit.

Commercial Properties

  • GST Rate: Around 12%, usually with Input Tax Credit (ITC).

3. How Is GST Calculated on Flats?

GST is charged only on the construction cost, not the land value. To simplify, the government assumes land accounts for one-third (1/3) of the total price. GST is applied to the remaining two-thirds (2/3).

Formula:
Taxable Value = Total Price × (2/3)
GST Amount = Taxable Value × Applicable GST Rate

Example 1: Affordable Housing

  • Flat Price = ₹42 lakh

  • Taxable Value = ₹42 lakh × 2/3 = ₹28 lakh

  • GST = 1% of ₹28 lakh = ₹28,000

Example 2: Non-Affordable Housing

  • Flat Price = ₹75 lakh

  • Taxable Value = ₹75 lakh × 2/3 = ₹50 lakh

  • GST = 5% of ₹50 lakh = ₹2.5 lakh

4. Why No Input Tax Credit (ITC)?

Earlier, developers could claim ITC and pass on benefits to buyers. However, to simplify GST and reduce misuse, the government removed ITC for residential properties under the new regime. This means developers cannot offset their tax liability, but the GST rate itself has been lowered to make homes affordable.

5. Does GST Apply to Ready-to-Move Flats?

No. If the builder has received an Occupancy Certificate (OC) or Completion Certificate (CC) before you purchase, GST is not applicable. However, stamp duty and registration charges will still apply.

6. Important Points Buyers Should Know

✔ Check whether the project falls under affordable housing or not.
✔ GST is mandatory only for under-construction properties.
✔ Ensure the builder provides a proper GST invoice.
✔ GST is calculated only on construction, not on land value.
✔ Stamp duty and registration charges are separate and not covered under GST.

7. Summary Table of GST Rates

Property Type GST Rate ITC Available? Condition
Affordable Housing 1% No Price ≤ ₹45 lakh, carpet area limits
Non-Affordable Housing 5% No Price > ₹45 lakh
Commercial Property 12% Yes Applicable for office/shops
Ready-to-Move-In 0% N/A OC/CC received

8. Final Thoughts

For homebuyers, understanding the GST rate on under-construction high-rise apartments in India is crucial. Affordable homes attract just 1% GST, while premium ones have a 5% GST rate. Always confirm whether your flat falls under affordable housing and ask your builder for transparency. Staying informed will help you budget smartly and avoid unexpected costs.

9. FAQs About GST on Flats

Q1. What is the GST rate for affordable high-rise apartments?

It’s 1% without ITC for flats priced up to ₹45 lakh and meeting carpet area limits.

It’s 5% without ITC for flats above ₹45 lakh or exceeding affordable housing limits.

No. Once a property has a Completion Certificate, GST does not apply.

Yes, if monthly charges exceed ₹7,500, GST at 18% applies.

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