GST on Property Purchase

So the tax is not decided by the price of the flat. It is decided by whether the builder has the completion certificate yet.

What is the GST rate on property in India?

Source: Decisions of the 34th GST Council meeting, 19 March 2019, paragraph 4. Read 6 September 2026.

What counts as an affordable house for the 1% rate?

Two tests, and you must clear both. The GST Council set them in its 33rd meeting.

• Carpet area. Up to 60 square metres in a metropolitan city. Up to 90 square metres elsewhere.
• Value. Up to ₹45 lakh, in metros and non-metros alike.

The Council named the metros: “Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).”

Note the word carpet. Carpet area is the usable floor area inside the walls. It is much smaller than the super built-up area builders advertise. A flat sold as 1,000 square feet super built-up may have a carpet area near 60 square metres. Ask for the carpet area in writing.

The ₹45 lakh ceiling has not moved since 2019. In most metros that now buys very little, so the 1% rate reaches far fewer buyers than it did. That is worth saying plainly.

Source: Recommendations of the 33rd GST Council meeting, 24 February 2019. Read 6 September 2026.

Why is a ready-to-move flat exempt from GST?

Because GST taxes services, not land. A builder selling an unfinished flat is selling you construction work. That is a service, so it is taxed.

Once the competent authority issues the completion certificate, there is no construction service left to sell. What changes hands is immovable property. Immovable property sits outside GST. The same logic makes a resale flat and a plot of land free of GST.

The GST Council was explicit that it wanted “a fair degree of taxation parity between under construction and ready to move property”. It got there by withdrawing a builder-side exemption on development rights for flats sold after the certificate, not by taxing you. Your bill is still nil.

This is a real cost difference between the two routes. Weigh it against possession risk on our page comparing under-construction and ready-to-move homes.

Does the builder pay GST on your behalf?

No. You pay it. It is added to each instalment on the demand letter.

Since the 2019 change, the builder cannot claim input tax credit on the 1% and 5% rates. It pays GST on cement, steel and contractors, and cannot set that off. So the tax on those inputs is buried in the base price you are quoted.

Two builder-side conditions explain why. At least 80% of inputs and input services must come from registered suppliers. On any shortfall, the builder pays 18% under reverse charge, and 28% on cement bought from an unregistered person. These costs sit inside the price. That is the honest answer to “why did the rate cut not make flats cheaper”.

What else attracts GST when you buy a home?

The flat is only part of the bill. Other charges are taxed separately, and often at a much higher rate.

Stamp duty and registration are not GST at all. They are a state levy, and they are payable on both under-construction and ready flats. Rates differ by state. See stamp duty by state and our list of the hidden costs of buying.

What should you check before you sign?

1. Ask for the carpet area in writing, in square metres. The 1% rate turns on it.
2. Ask whether the project is on the old rate. Projects ongoing on 1 April 2019 could opt to stay at 8% or 12% with credit. A few still do.
3. Check the completion certificate date. If it is already issued, refuse any GST on the demand letter.
4. Get the GST shown separately on every demand and every receipt, with the builder’s GSTIN.
5. Keep the receipts. You will need them if you sell and compute capital gains.

More on the wider process in our home buying guide, and on delays in possession delay remedies.