GST on Property Purchase in 2025: What Every Buyer & Developer Must Know

 


Introduction: Don’t Let GST Catch You Off Guard

If you're planning to buy property in India in 2025 — be it a villa plot, a flat, or a commercial investment — understanding how GST applies is absolutely essential. At SLV Housing Development Corporation, we’ve seen countless buyers walk into deals without fully grasping the tax implications. Some paid more than necessary. Some missed out on savings. And many were simply confused.

So we created this guide — clear, respectful, jargon-free — to help buyers, landowners, and developers make smarter real estate decisions.

GST on Residential Property in 2025

Here’s the good news: GST doesn’t apply to all types of properties.

If you’re buying a ready-to-move-in home, where the builder has already received a completion certificate or occupancy certificate (OC), then you don’t need to pay any GST at all.

However, for under-construction homes, the GST does apply. The rate depends on whether the project qualifies as affordable housing or not. For affordable housing projects, the GST rate is 1%. For all other under-construction housing, the rate is 5%.

What Qualifies as Affordable Housing?

This is where many people get confused. A home is considered “affordable” based on its size and price — and these limits vary by location.

In metro cities, a home qualifies as affordable housing if its carpet area is up to 60 square meters and its price is up to ₹45 lakhs. In non-metro areas, the allowed carpet area is a bit larger — up to 90 square meters — but the price cap remains the same, ₹45 lakhs.

In both cases, if these conditions are met, the GST is only 1%, which helps buyers reduce the overall cost.

Other Conditions You Should Know

Even if the flat qualifies as affordable housing, developers are only eligible to offer the 1% GST rate if at least 80% of the raw materials used in construction are sourced from registered GST dealers. If this condition isn't met, then the developer must pay 18% GST under what's known as the Reverse Charge Mechanism (RCM).

Also, it’s important to understand that the 1% GST on affordable homes is applied without input tax credit (ITC). This means the buyer cannot claim any GST paid as a tax deduction, and neither can the developer reduce the final price using GST credits.

GST Calculation: Let’s Break It Down

Let’s say you’re buying a home that qualifies as affordable housing and the base price per square foot is ₹6,000. With 1% GST, that adds ₹60 per square foot — making the final price ₹6,060 per square foot.

Now let’s take a non-affordable project with a base price of ₹10,000 per square foot. At 5% GST, that adds ₹500 per square foot — bringing the total to ₹10,500.

So yes, affordable housing makes a real difference when it comes to GST impact.

What About Commercial Property?

The GST on commercial properties is higher than residential ones.

If you're buying a shop or commercial space that’s part of a residential real estate project and occupies less than 15% of the total carpet area, the applicable GST is 5%.

However, if the commercial component exceeds 15% of the residential area, or if it’s a standalone commercial development, then the GST rate is 12%.

GST on TDR, FSI & Long-Term Land Lease

As developers, we often use Transfer of Development Rights (TDR), Floor Space Index (FSI), or enter into long-term leases to create projects. So how does GST apply to these instruments?

If the TDR, FSI, or lease is used for building residential projects and the units are sold before the occupancy certificate is obtained, then there’s no GST charged on the transfer of these rights.

However, if the sale happens after the project has received the occupancy certificate, GST is applicable — 1% for affordable housing, and 5% for other homes.

In the case of commercial projects, there’s no such exemption. GST is charged at a flat rate of 18% on TDR, FSI, and lease-related services.

GST on Construction Materials (And Why It Matters)

Every piece of raw material used in your future home — from cement to steel to tiles — is taxed under GST. These taxes directly affect the cost of construction, which eventually affects the price you pay as a buyer.

For example:

  • Cement attracts a high GST rate of 28%

  • Steel is taxed at 18%

  • Bricks can attract anywhere from 5% to 28%, depending on the type

  • Tiles, paint, and bathroom fittings also fall in the 18% to 28% range

That’s why developers must balance quality and cost — without passing the entire tax burden onto the customer.

Then vs Now: How GST Has Changed Since 2019

Before April 2019, the GST rates were higher — 8% on affordable housing and 12% on other housing, but with the benefit of ITC.

After the 34th GST Council Meeting in 2019, the rates were reduced to 1% and 5%, but without input tax credit.

This simplified the process and made it more transparent for buyers — but developers lost the benefit of cost reduction via ITC, which sometimes makes pricing more rigid.

What You Should Always Check Before Buying

Before signing any agreement, here are a few essentials you must verify:

  • Is the property under construction or ready to move in?

  • Does the home qualify as affordable housing?

  • Is GST included in the quoted price or charged extra?

  • Is the builder registered under GST and offering valid documentation?

  • Are construction milestones linked to GST payments in the agreement?

At SLV Housing, we ensure all these details are shared clearly and upfront.

Why SLV Housing Prioritizes Legal & Tax Transparency

We’ve seen firsthand how buyers feel overwhelmed by unclear pricing, hidden charges, and conflicting legal interpretations. That’s why, at SLV Housing, we don’t just sell land or homes — we build trust.

Here’s what we promise:

  • Transparent pricing — no hidden GST costs

  • Clarity on affordability classification

  • Buyer education on tax, RERA, and compliance

  • Zero confusion on whether GST applies or not on plotted layouts or built homes

Final Thoughts: Build Smart, Not Just Big

Understanding GST may seem like a technical detail, but it has a very real impact on your budget, decisions, and long-term investment.

At SLV Housing Development Corporation, we believe that informed buyers become empowered owners. And that’s what we’re here to support.

So whether you’re buying a villa plot, building a custom home, or looking for legally sound investments in Bengaluru — we’re here to help you navigate every detail, including the taxes.

Need Help With GST or Property Investment?

Get in touch with our team today:

🌐 www.slvhousing.com
📧 marketing@slvhousing.co.in
📱 +91 70900 55511

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