GST on Under-Construction Property: Updated Rates & Input Tax Credit Guide

Goods and Services Tax (GST) applies to under-construction properties but not to ready-to-move-in homes with a completion certificate. Understanding this distinction can save you lakhs.

Current GST Rates

Affordable housing: 1% GST (without ITC). Non-affordable housing: 5% GST (without ITC). These rates apply to under-construction properties only.

What Qualifies as Affordable Housing?

As per current guidelines, affordable housing includes properties up to Rs 45 lakh with carpet area up to 60 sq m in metros and 90 sq m in non-metros.

Input Tax Credit (ITCs)

Since July 2019, homebuyers cannot claim ITC on GST paid for property purchases. Builders also cannot pass on ITC benefits to buyers under the new GST regime.

Impact on Homebuyers

The effective tax burden is lower than the pre-GST era, but it's essential to factor GST into your total budget when planning an under-construction purchase.