When you begin "https://www.thewadhwagroup.com/blog/gst-impact-on-real-estate-in-2025-what-buyers-should-know/" target="_blank" rel="noopener noreferrer">planning to buy a home, your mind often focuses on the price quoted by the builder. However, the actual amount you will spend includes more than just the base cost of the flat. One of the most important cost components for under-construction property is the GST on flat purchase. This is a tax that applies uniformly across India and it is particularly relevant for those buying in cities like Mumbai, Pune, Thane, and Navi Mumbai, where a large number of projects are still being built.
GST, which stands for Goods and Services Tax, came into effect in July 2017. Before GST was introduced, homebuyers had to pay a combination of taxes such as service tax, value added tax (VAT), and certain local levies. These taxes were not uniform across states, which made property transactions complicated. GST replaced all these indirect taxes with a single nationwide system, making property costs easier to understand.
In March 2019, the GST Council revised the way GST applies to the real estate sector. The rates for residential property were reduced and the option of input tax credit (ITC) was removed for homebuyers. This change aimed to make taxation simpler and more predictable. These rates remain the same in 2025, so if you are buying a home this year, you can calculate GST using a fixed set of rules.
GST Rates for Real Estate in 2025
GST is uniform across the country. Whether you buy a flat in Mumbai or in any other city, the same GST rates will apply as long as the property category is the same. Here is a simplified table with all the rates:
| Property Type | GST Rate | ITC Allowed | When GST Applies | Criteria |
| Affordable housing under construction | 1% | No | On payments made before the Occupation Certificate (OC) or Completion Certificate (CC) | Price up to ₹45 lakh and carpet area up to 60 sq m in metros or 90 sq m in non-metros |
| Non-affordable housing under construction | 5% | No | On payments made before OC or CC | Applies if price or carpet area exceeds affordable housing limits |
| Commercial unit within residential project (RREP) | 5% | No | On payments before OC or CC | RREP means residential project with commercial area ≤ 15% of total carpet area |
| Commercial property not part of RREP | 12% | Yes | On payments before OC or CC | ITC may be available subject to GST rules |
| Ready-to-move residential property with OC | 0% | NA | After OC or resale | GST is not applicable; state stamp duty and registration fees still apply |
| Parking, clubhouse, or amenities billed separately | 18% | Depends | If billed as services | Applies when these charges are not part of the property value |
| RWA maintenance above ₹7,500/month per member | 18% | NA | If housing society turnover is above ₹20 lakh per year | Full amount taxable under CBIC rules |
Why GST Matters for Buyers in 2025
- Uniform rates across India
GST rates are the same nationwide with no regional variations. A buyer in Maharashtra pays the same GST rate as one in Karnataka for the same property type. - Difference between under-construction and ready properties
Under-construction properties attract GST, while ready-to-move homes with an Occupation Certificate are outside the scope of GST. This distinction can create significant cost differences. - GST applies only on construction value
Land value is excluded from GST, roughly constituting one-third of the property price. - Impact on project comparisons
Knowing GST rates helps buyers compare projects fairly. A lower base price with a higher GST rate may be costlier overall than a higher base price with no GST.
Detailed Examples of GST Impact (Maharashtra Rates)
Stamp duty is typically 5% and registration fees are 1%.
| Example | Base Price (₹) | Taxable Construction Value (₹) | GST Rate | GST Amount (₹) | Stamp Duty (₹) | Registration (₹) | Total Cost (₹) |
| Affordable housing in Mumbai | 40,00,000 | 26,66,667 | 1% | 26,667 | 2,00,000 | 40,000 | 42,66,667 |
| Non-affordable under-construction in Pune | 80,00,000 | 53,33,333 | 5% | 2,66,667 | 4,00,000 | 80,000 | 87,46,667 |
| Ready-to-move home in Navi Mumbai | 80,00,000 | N/A | 0% | 0 | 4,00,000 | 80,000 | 84,80,000 |
| Commercial shop in non-RREP Thane | 50,00,000 | 50,00,000 (full price) | 12% | 6,00,000 | 2,50,000 | 50,000 | 59,00,000 |
Note: For any GST-related matters, including interpretations, calculations, or eligibility, it is strongly recommended to seek specialized expert advice from qualified tax professionals or chartered accountants. This blog provides general information based on 2025 GST rules and may not cover individual-specific cases or future regulatory changes.
What Buyers Should Check Before Booking
- Confirm whether the project has received its Occupation Certificate or Completion Certificate.
- Verify if your unit meets the affordable housing definition to qualify for the 1% GST rate.
- Request a detailed cost sheet from the developer showing GST charges explicitly.
- Inspect charges for parking, clubhouse, or amenities separately to note if 18% GST applies.
- For properties in completed societies, check if monthly maintenance exceeds ₹7,500 and society turnover crosses ₹20 lakh, which triggers the 18% GST on maintenance.
- If buying commercial property, confirm your eligibility for Input Tax Credit (ITC) and clarify the GST rate.
Common Misunderstandings About GST on Flat Purchase
- GST has not replaced stamp duty or registration charges; these remain as separate, state-level levies.
- GST is not always 12% on flats. For residential properties, it is 1% or 5%, depending on affordability category; 12% applies mainly to commercial properties not in a residential real estate project.
- Ready-to-move homes with an Occupation Certificate do not attract any GST.
Smart Approaches for 2025 Buyers
- Compare total costs between under-construction and ready homes considering GST and other taxes.
- Plan payments aligned with construction milestones to manage GST flow effectively.
- Utilize the affordable housing criteria to minimize GST outlays.
- Base decisions on the currently implemented rates as proposed GST slab changes (like two-slab structures) are not effective as of 2025.
- Deal with developers providing a clear tax breakup to avoid surprises.
Final Word
Understanding all charges, including GST, stamp duty, registration, and other fees, is critical before signing agreements. Complete cost clarity ensures confident decisions and helps avoid unexpected expenses. Explore projects from "https://www.thewadhwagroup.com/?utm_source=chatgpt.com">The Wadhwa Group with full tax visibility for clear decision-making.
Frequently Asked Questions
Q1. Does GST on flat purchase apply to resale flats?
No. GST applies only on the first sale of under-construction properties. Resale of completed units is GST-exempt.
Q2. How is GST calculated on a flat?
GST is charged on two-thirds of the agreement value (construction portion), at the applicable rate (1% or 5% residential; 12% commercial).
Q3. Does GST vary by state?
No, GST rates are uniform nationwide. Stamp duty and registration charges vary by state.
Q4. Can you avoid GST by paying after the Occupation Certificate is issued?
Yes, payments made after OC or CC are GST-exempt. Payments made before remain taxable.
Q5. Are parking charges taxed at 18%?
Yes, if they are billed separately as a service.
