GST on Property Purchase in India: What Buyers and Investors Need to Know
Understanding GST on property purchase India is one of the most important steps before signing an agreement for any real estate transaction. Whether you are buying an under-construction flat, a ready-to-move home, a commercial shop, or a plot of land, the Goods and Services Tax (GST) framework treats each category differently — and the differences can add up to several lakhs of rupees. This guide explains every applicable rate, the key exemptions, and what Pune buyers in particular should watch out for.
The 2019 Watershed: How GST on Property Purchase India Changed Forever
Before April 1, 2019, under-construction residential properties attracted 12% GST for non-affordable housing and 8% for affordable housing, with Input Tax Credit (ITC) available to developers. The 33rd GST Council Meeting held on February 24, 2019 changed all of that dramatically. (Source: 33rd GST Council Meeting press release, ClearTax)
Effective April 1, 2019, via Notification No. 03/2019-CT(R) dated March 29, 2019, the rates were slashed to 5% and 1% respectively — but with a critical trade-off: Input Tax Credit was simultaneously removed for all residential under-construction projects. This means that while buyers benefit from lower headline rates, developers can no longer offset their GST paid on raw materials like cement and steel against their tax liability. The net effect on end pricing varies by project, but the lower rate has generally been a positive for homebuyers. (Source: ClearTax, taxguru.in analysis of Notification No. 11/2017-CT(R) as amended)
For buyers, Section 17(5)(d) of the CGST Act is equally important: it explicitly blocks any ITC claim on the construction of immovable property for personal use. In plain terms, if you are buying a flat for yourself or your family, you cannot claim any GST credit — regardless of what rate you pay. (Source: ClearTax, Mondaq India 2025)
GST Rates at a Glance: Every Property Type Covered
Here is a straightforward breakdown of the current rates, unchanged since April 1, 2019:
Under-Construction Residential — Affordable Housing: 1% GST
Under-construction properties classified as “affordable housing” attract just 1% GST without ITC. To qualify, a property must satisfy both of the following conditions simultaneously: the agreement value must not exceed ₹45 lakh, AND the carpet area must not exceed 60 square metres in metro cities or 90 square metres in non-metro cities. (Source: 33rd and 34th GST Council Meetings, February–March 2019; Notification No. 03/2019-CT(R))
This distinction between metro and non-metro is especially relevant for Pune buyers. Metro cities for this definition are Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, and Mumbai (the entire MMR). Pune is classified as a non-metro city, which means the affordable housing carpet area limit here is 90 sqm — not 60 sqm. Buyers looking at projects like 42 Park Street in Talegaon, with prices starting from ₹24.11 lakh, may find they comfortably fall within the affordable housing threshold and benefit from the 1% rate. (Source: 33rd GST Council Meeting; taxguru.in; mastersindia.co)
Under-Construction Residential — Non-Affordable Housing: 5% GST
All other under-construction residential properties — those that exceed the ₹45 lakh value cap or the applicable carpet area limit — attract 5% GST without ITC. This is the rate that applies to the majority of mid-segment and premium housing projects across India. (Source: 33rd GST Council Meeting, ClearTax, Razorpay)
Under-Construction Commercial Property: 12% GST
Under-construction shops, offices, and other commercial spaces attract 12% GST, and in this category ITC remains available to the developer. Buyers of commercial units absorb this higher rate, but the availability of ITC on the developer’s side can theoretically moderate construction costs. If you are considering a commercial unit such as the shops in 42 Park Street, factor in the 12% rate when calculating total acquisition cost. (Source: NoBroker.in, Razorpay GST guide 2026, IndiaFilings)
Ready-to-Move Properties: 0% GST
Once a residential project receives its Occupancy Certificate (OC) or Completion Certificate (CC), any subsequent sale is completely outside the scope of GST. The transaction is classified as a sale of immovable property under Schedule III of the CGST Act 2017 and attracts zero GST. Only stamp duty and registration charges apply. (Source: Schedule III CGST Act 2017; Mondaq India; Razorpay; ClearTax)
This is a significant advantage for buyers who prefer ready-to-move homes. Pro Realty’s Swadesh project at Kanhe Phata is a ready-to-move development (MahaRERA registration P52100003849), which means buyers there face zero GST liability whatsoever — only the applicable stamp duty and registration charges.
Resale / Second-Hand Properties: 0% GST
Second-hand flat purchases are also entirely exempt from GST regardless of property value or size. Stamp duty and registration charges remain applicable, but no GST component is involved. (Source: NoBroker, ClearTax, Schedule III CGST Act)
Raw Land and NA Plots: 0% GST
The sale of land — including raw plots and non-agricultural (NA) plots — is exempt from GST under Schedule III of the CGST Act 2017. Importantly, CBIC Circular No. 177/09/2022-TRU dated August 3, 2022 confirmed that even developable land with basic infrastructure such as drainage, levelling, and electricity connections retains its GST-exempt status. This directly benefits buyers of NA plots at Green Aura in Talegaon, where there is no GST applicable on the land transaction itself. (Source: ClearTax GST on Land; CBIC Circular 177/09/2022-TRU; Razorpay)
How GST Is Actually Calculated on an Under-Construction Flat
Many buyers are surprised to learn that GST on a flat is not applied to 100% of the agreement value. Under Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017, the law mandates a notional deduction of one-third of the agreement value as the land component. GST is therefore charged on two-thirds of the agreement value. (Source: NoBroker; Ambak blog; Kotak Bank guide; Notification 11/2017-CT(R))
In practice, most builders quote and collect GST directly at the applicable rate on the total agreement value, absorbing this mechanism on their side. But understanding the underlying calculation is useful for verification:
Example — Non-Affordable Housing: Agreement value ₹60 lakh at 5% GST. Effective taxable value = ₹60L × 2/3 = ₹40L. GST payable = 5% × ₹40L = ₹2 lakh. (Source: NoBroker, Kotak Bank guide)
Example — Affordable Housing: Agreement value ₹40 lakh at 1% GST. Effective taxable value = ₹40L × 2/3 = ₹26.67L. GST payable = 1% × ₹26.67L = approximately ₹26,667. (Source: ClearTax, Razorpay)
Remember that GST applies on each instalment as it is paid during the construction phase. The moment the builder obtains the OC, all further transactions on those units become GST-free.
Post-Possession: GST on Housing Society Maintenance
Your GST obligations do not necessarily end at possession. Housing society maintenance charges can attract 18% GST — but only when both of the following conditions are met simultaneously: the monthly per-member charge exceeds ₹7,500, AND the society’s annual aggregate turnover exceeds ₹20 lakh. If either condition is not met, no GST applies to maintenance charges. Crucially, when GST does apply, it is charged on the full maintenance amount, not merely on the portion above ₹7,500. (Source: ClearTax GST on Maintenance Charges; NoBrokerHood; GetSwipe blog)
For buyers in smaller housing societies or projects with modest maintenance fees, this threshold means maintenance charges will most likely remain GST-free.
The 2025 Update: What Changed and What Did Not
GST 2.0, which became effective September 22, 2025, brought a welcome reduction for the construction sector — cement was moved from the 28% slab to the 18% slab, which reduces input costs for builders and may gradually reflect in project pricing. However, the GST rates on property transactions themselves — 1%, 5%, and 12% — remain completely unchanged. No amendments to property GST rates were announced in Budget 2025-26 either. Buyers can plan with confidence that the rate structure described in this article is current and stable. (Source: GST Council 2025 update)
Conclusion: Make GST Work in Your Favour with Pro Realty Solutions
Understanding GST on property purchase India is not just an accounting exercise — it directly shapes which property type offers the best value for your budget. Ready-to-move properties and land plots attract zero GST. Under-construction affordable housing is taxed at just 1%. And since Pune is a non-metro city, the 90 sqm carpet area limit for affordable housing gives local buyers considerably more flexibility than metro residents enjoy.
Pro Realty Solutions’ portfolio is structured to take maximum advantage of this framework. Whether you are drawn to the zero-GST, ready-to-move Swadesh homes at Kanhe Phata, the GST-exempt NA plots at Green Aura, Talegaon, or the competitively priced units at 42 Park Street, our team can walk you through the exact tax implication of each option before you commit. Call us at +91 89566 13037 or write to akshay@prorealtysolutions.co.in to speak with an advisor today. Our office is at Building No. 4, Shradha Regency, Wanwadi, Pune 411040.
With the right guidance on GST on property purchase India, your next investment decision can be both legally sound and financially optimised.
Frequently Asked Questions
Is GST applicable on a ready-to-move flat in Pune?
No. A ready-to-move residential property that has received its Occupancy Certificate (OC) or Completion Certificate (CC) is completely outside the scope of GST. The transaction falls under Schedule III of the CGST Act 2017 as a sale of immovable property. Only stamp duty and registration charges apply. Projects like Swadesh at Kanhe Phata, which is ready to move in, are therefore entirely GST-free for buyers. (Source: Schedule III, CGST Act 2017; ClearTax; Razorpay)
What is the GST rate on an under-construction flat in Pune, and does the affordable housing limit differ from Mumbai?
Under-construction non-affordable housing in Pune attracts 5% GST without ITC. For affordable housing — properties valued up to ₹45 lakh — the rate drops to 1% without ITC. Because Pune is classified as a non-metro city, the carpet area limit for affordable housing is 90 sqm, compared to just 60 sqm in metro cities like Mumbai, Bengaluru, or Delhi NCR. This larger size allowance means more Pune buyers can qualify for the 1% rate than their counterparts in metro cities. (Source: 33rd GST Council Meeting, February 24, 2019; Notification No. 03/2019-CT(R); taxguru.in)
Is there GST on buying a plot of land or NA plot in Maharashtra?
No. The sale of land — whether raw agricultural land, non-agricultural (NA) plots, or even developable plots with basic amenities like drainage and electricity connections — is exempt from GST under Schedule III of the CGST Act 2017. CBIC Circular No. 177/09/2022-TRU (dated August 3, 2022) specifically confirmed that basic infrastructure on a plot does not convert the transaction into a taxable supply. Buyers of NA plots therefore pay no GST — only applicable stamp duty and registration charges. (Source: CBIC Circular 177/09/2022-TRU; ClearTax GST on Land; Razorpay)
