GST treatment depends on whether the transaction is a construction service, works contract, transfer of development rights, completed-property sale or material supply. New residential projects generally use 1% for qualifying affordable residential apartments or 5% for other residential apartments without ITC, subject to scheme conditions. Commercial apartments in a residential real-estate project may use 5% without ITC; other commercial construction commonly remains 18% with eligible ITC.
Current law first, source draft second
This page preserves the useful intent of the supplied draft but corrects duplicated text, outdated dates, unsupported statistics and overbroad legal statements. Rates and portal procedures can change; verify the live notification and facts before filing or pricing.
Effective-date control: A rate, waiver or procedure described for an earlier period must not be applied to a 2026 transaction merely because it still appears in an older article or search result.
Under-construction property
A promoter’s supply of construction to a buyer before completion certificate or first occupation is generally taxable. Instalment timing, agreement value, development rights and promoter or project category affect the analysis.
Affordable housing test
Concessional 1% treatment requires both the relevant carpet-area limit and the prescribed gross-amount cap. The area limit commonly differs between metropolitan and non-metropolitan locations. PMAY labels alone should not replace the legal test.
Ready-to-move and resale
A genuine sale of completed building after the statutory completion trigger is generally outside GST, although stamp duty, registration charges and other taxes remain. A contractor separately hired to build on owned land supplies taxable works-contract service.
Materials and ITC
Cement, steel, fittings and other inputs have their own HSN rates. A promoter under the 1% or 5% residential scheme cannot claim ITC for that output. Other contractors may claim eligible credit, but sections 17(5)(c) and 17(5)(d) block specified construction-related credits.
80% procurement rule
Promoters under the new residential scheme must generally procure at least 80% of input and input services from registered suppliers, with special reverse-charge treatment for shortfall and cement. Project-wise monthly and annual tracking is essential.
Buyer and builder checklist
Identify promoter, project and apartment type; confirm RERA and completion status; separate base price, maintenance and other charges; verify tax rate and land deduction; check invoice timing; and retain agreement, demand letters, receipts and completion evidence.
Get the GST position checked before acting
Map the transaction, effective date, registration, classification, valuation, input credit and return treatment to the current law and documents.
Request a GST compliance reviewFrequently asked questions
Is GST payable on a ready-to-move flat?
Generally not when the entire consideration is received after completion certificate or first occupation, whichever is earlier, subject to the facts.
What is the common GST rate on a new residential apartment?
Generally 1% for qualifying affordable residential apartments or 5% for other residential apartments, without ITC and subject to conditions.
Is land always deducted at actual value?
No. The notified construction-service mechanism commonly deems land as one-third of the total amount.
Can a buyer claim ITC on a home?
A personal homebuyer generally cannot; promoter and business credit rules require separate section 16 and section 17 analysis.
Is all commercial construction taxed at 18%?
No. Commercial apartments in an RREP may use 5% without ITC; classification and project type matter.
Is GST avoided by buying land and hiring a contractor?
The land sale may be outside GST, but the contractor’s works-contract service is taxable.
Are cement and steel taxed at the apartment rate?
No. Materials have their own goods rates; the construction-service rate applies to the service supply.
