GST on Real Estate — Residential, Commercial and Under-Construction Property

GST on real estate has undergone several changes since 2019 — with different rates applying to affordable housing, regular residential, commercial construction, and a complete GST exemption on completed (ready-to-move) properties. Here is the complete guide to GST applicability on real estate in India.

GST on Under-Construction Residential Property

• Affordable housing (carpet area ≤ 60 sq.m in metro cities / ≤ 90 sq.m in other cities AND value ≤ ₹45 lakh): GST at 1% (no ITC)
• Other residential projects (not affordable housing): GST at 5% (no ITC)
• Applicable on the construction value — not including land value (land is typically deducted at 1/3 of total agreement value)
• No GST on completed/ready-to-move residential property (where Occupancy Certificate has been issued before sale)

GST on Commercial Property

• Under-construction commercial property (shops, offices, warehouses, malls): 12% GST
• ITC is available to the builder/developer at 12% rate (unlike residential where ITC is blocked)
• Ready commercial property: Generally exempt from GST (same as residential)
• Renting of commercial property: 18% GST (taxable service — RCM applies if landlord is unregistered)

Developers — ITC Reversal Requirement

Developers who received ITC on inputs under the old regime (before April 2019) must reverse a proportional amount if they have unsold units at the transition date. Under the new concessional rate scheme (1%/5%), builders cannot claim ITC on construction inputs — making correct cost pricing essential.

Joint Development Agreement (JDA) — GST Implications

• When a landowner gives land to a developer under JDA and receives flats in exchange — GST applies on the "development rights" transferred
• Landowner pays GST on the deemed value of flats received
• Developer pays GST on construction of the landowner's share at applicable rates (1%/5%/12%)

Conclusion

GST on real estate varies significantly by property type, project status and buyer eligibility — requiring careful analysis for each transaction. SPOTON provides GST advisory for real estate developers and buyers across Kerala including RERA-registered projects. Contact us for expert GST compliance for your real estate business.