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GST 2025: A Complete Guide for Discerning Property Buyers

By LODHA

With the introduction of the Goods and Services Tax (GST) in 2017, India’s indirect taxation landscape underwent a profound transformation. The sector was once burdened by a web of taxes and was among the most affected. In light of the Union Budget 2025, which reaffirmed the prevailing GST framework while hinting at potential refinements, understanding its continued impact on real estate remains vital, particularly for discerning homebuyers and industry stakeholders across markets like the Mumbai real estate market, Bangalore real estate market, and Pune real estate market.

Applicability of GST on Real Estate: What You Must Know

A key consideration for any homebuyer is whether GST applies to the property in question. GST is levied only on under-construction properties; completed or ready-to-move-in homes, classified as immovable property, are exempt. Similarly, GST does not apply to resale properties or standalone land transactions.

GST Rates Applicable to Property Types

Note: ITC = Input Tax Credit, which is disallowed under 1% and 5% slabs.

How is GST Calculated on a Property?

GST is charged only on the construction component of the property. Since land is exempt from GST, the government assumes that 33% of the agreement value accounts for land, and thus, GST is applied to the remaining 67%.

Formula for GST Calculation:
Total GST = CGST + SGST

Example:

Let’s say a developer quotes the base price (excluding GST) as �10,000.

• Deduct land value (33%): â‚�3,300 (non-taxable component)
• Taxable construction value = â‚�6,700

Apply GST @ 5%:

• CGST @ 2.5% = â‚�167.50
• SGST @ 2.5% = â‚�167.50
• Total GST = â‚�335

Total payable (excluding stamp duty & registration) = �10,335

(Assuming GST is added over and above the base price)

Key Impacts of GST on Real Estate in 2025

1. Simplified Taxation Structure
GST replaces a multi-tax regime, consolidating VAT, service tax, and excise duty into a single framework.

2. Greater Transparency
Uniform tax rates reduce ambiguity, offering buyers a clearer understanding of costs.

3. Loss of Input Tax Credit
Under the 1% and 5% GST regimes, developers cannot claim ITC, which may impact project economics and, in some cases, the final price offered to buyers.

4. ÀÖ¾ºÌåÓýµÇ¼ƽ̨ Property Benefits 
Projects under the 12% regime (with ITC) continue to enjoy input cost adjustments, especially in office and retail developments.

6 Steps to Ensure GST Compliance When Buying a Flat

1. Confirm the Property Type
GST applies only to under-construction homes. Completed and resale properties are not subject to GST.

2. Verify the Completion Certificate
If a project has received its completion certificate, it is legally exempt from GST. Request documentation before making payments.

3. Identify the Correct GST Rate
Know whether your property falls under affordable or non-affordable housing, as this directly impacts the GST rate (1% or 5%).

4. Understand GST on Added Costs
Charges for parking, club access, and maintenance may also attract GST. Check whether these are included or billed separately.

5. Check for ITC Benefits (Old Regime)
If your developer is using the old 8% or 12% regime with ITC, ensure that the benefit is being transparently passed on.

6. Seek Legal Guidance
Consult a legal expert or tax advisor to review GST-related clauses in your agreement before finalising the transaction.

As one of the most influential cost considerations in home buying, the GST impact on real estate continues to shape both pricing and buyer sentiment. For those planning to invest in under-construction real estate in 2025, understanding GST is essential—not only for budgeting purposes but also for making informed, confident decisions in an increasingly transparent market.

Frequently Asked Questions

Is GST applicable to ready-to-move-in properties?
No. GST is not levied if the completion certificate has been issued.

Can I claim a refund on GST paid for property?
No. GST paid by homebuyers is not refundable.

Does GST replace stamp duty and registration charges?
No. These are separate state levies and remain payable.

Is GST applicable to resale properties?
No. GST is not levied on the resale of immovable property.

In the current real estate market in India, can developers choose the older GST regime?
Yes, for certain ongoing projects, developers may opt for the 12% rate with ITC, subject to regulatory compliance.