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GST on Flat Purchase | GST on Residential Property
The GST was implemented and came into effect on July 1, 2017. This tax scheme has significantly influenced numerous Indian businesses, especially in real estate. This article is about the applicable GST on flat purchases, residential property, and so on. So, let’s start.
GST on Residential Property in India: What Is It?
Before the implementation of GST, property purchasers had to face the hassle and stress of several taxes, like the central excise, the value-added service tax, and so on. There’s no doubt that the taxation of properties back then lacked transparency and was intricate. Things are not the same thanks to the GST.
At first, the GST on residential property purchases was 8% (affordable housing) and 12% (non-affordable housing). The taxation scheme allowed property buyers to avail themselves of the benefit of the ITC (Input Tax Credit) on the initial applicable GST rates.
However, as of April 1, 2019, new and revised GST rates are now applicable, which were decided at the 33rd GST council meeting. The revised GST rate on flat purchases is now 1%, provided it’s an affordable housing unit. On the other hand, the GST rate on luxury or non-affordable properties is 5% without ITC.
GST on Flats: Learn All About It
Everyone has to pay GST on flats and apartments if such properties are under-construction developments in one of India’s megacities. Nevertheless, it is important to be aware that the purchase of apartments or flats in finished complexes with an Occupation Certificate is not subject to the GST.
A Summarized table on GST on Flat Purchase 2022:
Types of Residential Property
GST Till 31-03-2019
GST From 01-04-2019
Non-Affordable or Luxury Housing (Except For Under Construction)
12% + ITC
5% Excluding ITC
Affordable Housing (Flats or Apartments) Under Construction
8% + ITC
1% Excluding ITC
For Completed Residential Projects (Ready-To-Move-In Properties)
GST Not Applicable
GST Not Applicable
Note: The revised GST rate on apartmentsor any other residential property, excluding the ITC or input tax credit, applies to every new residential project. It applies only to unfinished development projects till 31-03-2019
GST on Residential Property: Prerequisites & Conditions
It is mandatory to meet certain conditions or prerequisites to purchase a residential property with a 1% GST exemption. The housing project will be eligible for affordable housing under the following conditions:
Residential Property in Non-Metro Cities Comes Under the Affordable Housing Category When-
The area of the Under-Construction Flat/House/Apartment is 90 sq.m. with pricing till 45 lacs.
Residential Property in Metro Cities Comes Under the Affordable Housing Category When-
The area of the Under-Construction Flat/House/Apartment is 60 sq.m. with pricing till 45 lacs.
Need 1% GST on Flat Purchases? Meet These Additional Conditions
To qualify for a 1% GST rate on flat purchases, one must purchase a minimum of 80% of the raw materials from any registered dealer. If not, under RCM, the flat or housing project developer must pay 18% GST.
There’s no ITC to get entitled to a 1% GST rate on affordable housing that’s under construction. Thus, when paying GST for property acquisition, the GST won’t be deductible from the buyer’s income.
Conclusion: The Influence of GST on Real Estate
The Indian real estate industry underwent a major reform after the introduction of GST. Earlier, the housing developer used to pay permission fees, service taxes, legal expenses, excise duty, VAT, customs duty, etc., affecting their taxation procedures and increasing the payment load on property purchasers.
However, things have become simpler and more streamlined under the GST law. By surging the real estate tax rate to 12%, the latest GST tax regime has significantly reduced the burden on property purchasers. The GST rates on real estate have been lowered after the GST council meeting in 2019. Since then, buying property has become less of a headache for Indians.
At Piramal Realty, we handle all real estate requirements, from locating the ideal property to negotiating the best price. For a hassle-free real estate experience, contact us right away!
Frequently Asked Questions
Is GST applicable on under construction flats?➕
Yes, GST on flat purchase under construction is applicable.
Is there any GST applicable on a home loan?➕
When someone opts for a home loan, they have to pay GST to the bank for the legal, technical valuation, and processing fees.
What is the GST rate for new flat purchase?➕
As of April 1, 2019, the revised and updated GST on flat purchase of affordable residential units is 1% without ITC. However, the GST rate on expensive residential units is 5% without ITC.
Who must pay the GST applicable on flat purchases?➕
If someone is investing in or purchasing an under-construction property in India, they are liable to pay GST on new housing properties or completed apartments and flats.
Disclaimer- This article is based on the information publicly available for general use. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.
