Chhajer Yash & Co.

Real Estate GST

Since 2019, developers have had a choice, but it’s a genuine trade-off: a lower rate that comes with no ITC at all, against a higher rate that keeps credit flowing. And once completion happens, GST leaves the picture entirely.

GST Compliance

Real Estate GST

Works Contract Under GST

Restaurant & Hospitality GST

E-commerce GST

Capital Gains on Property

Input Tax Credit: The Rules

Rate structures and RERA-adjacent compliance can vary by project and state. This article is for general information and does not constitute tax advice.

The 2019 Rate Structure

Effective 1 April 2019, under-construction residential property is taxed at 5% without ITC for regular housing, and 1% without ITC for affordable housing (typically carpet area and value caps applying, varying by city category). Commercial property in a mixed-use project follows a separate 12% rate, generally with ITC available. New projects launched after that date default into this no-ITC structure, though a one-time transition option existed at the time for projects already ongoing.

The 80% Procurement Rule

A developer under the no-ITC scheme must still procure at least 80% of inputs and input services (cement specifically excluded from this calculation and separately taxed regardless) from GST-registered suppliers. Falling short triggers reverse charge liability on the shortfall, effectively taxing that gap even though ITC is unavailable to offset it.

Completion Certificate: Where GST Stops Applying

Once a Completion Certificate (or first occupation) is issued, the sale of that unit is treated as a sale of immovable property, entirely outside GST. A resale after completion attracts stamp duty only, no GST at all — a meaningfully different tax position from buying the same unit while it was still under construction.

FAQs: Real Estate GST

Does GST apply at all when buying a fully completed, ready-to-move-in flat?

No, once a Completion Certificate is issued, the sale is treated as a sale of immovable property, entirely outside GST.

Is cement counted toward the 80% registered-procurement requirement?

No, cement is specifically excluded from that calculation and taxed separately under its own reverse-charge treatment regardless of source.

Can a developer under the no-ITC scheme still claim ITC on the commercial portion of a mixed-use project?

Generally yes, since commercial units in a mixed-use project follow a different 12% rate structure that typically preserves ITC.

What happens if a developer procures less than 80% from registered suppliers?

Reverse charge liability applies on the shortfall, effectively taxing that portion even though ITC isn’t available to offset it.

Do affordable housing GST rate benefits depend on income of the buyer?

No, they turn on carpet area and value caps of the unit itself, not the buyer’s income.

Last updated on 11 August 2026