GST on Flat Purchase in India
GST on Flat Purchase in India: It is crucial to understand that GST applies only to under-construction properties. If the property you are going to buy is ready to move, no GST shall be charged to that property.
Therefore, GST is applicable only on the purchase of under-construction Flats, Apartments, Bungalows, and Developable properties.
GST on Purchase of Flat in India
As we have come to know a ready-to-move Flat, Apartment, Bungalow is not subjected to any GST. Now let us know the GST rate on purchase of flats in India.
From 1st April 2019, there have been only two GST rates on the purchase of under-construction properties. One is 1% and the other is 5%. As per the 33rd meeting of the GST Council, the revised GST rates are as follows:-
| Types of Property | GST rate up to 31.03.2019 | GST rate w.e.f 01.04.2019 |
| Affordable housing* | 8% with input tax credit (ITC) | 1% without ITC |
| Non-affordable housing | 12% with ITC | 5% without ITC |
*Affordable housing means: (i) For Metro Cities: The carpet area not more than 60 sq. Metre in Metropolitan Cities and valued less than Rs. 45 Lakh.
(ii) For other cities: The carpet area should not exceed 90 sq. Metre and valued less than Rs. 45 Lakh.
So, if any property is ready to move, GST can not be levied on that property in case of affordable or non-affordable properties.
Therefore, the above new GST rates shall apply to all the new projects. However, in that case, the Builders/ Developers are not entitled to receive any input tax credit of GST.
However, in the case of a ready-to-move property, it is exempted from GST only when the Developer can submit a full completion certificate issued by appropriate local authorities.
GST For Purchase of Flat at a Glance
- GST Applicability: Residential property with up to 15% of commercial space is treated as residential property under GST and is subjected to GST applicability;
- GST on Plots: For purchase of lands or plots, you are not required to pay any GST ;
- Ready to move: If you are buying a flat that is ready to move in, you are not required to pay any GST on the same;
- Commercial Property: The effective GST on commercial property is 12%;
- GST on Registration of Property: The introduction of GST does not negate the applicability of stamp duty on property registration. So you are required to pay stamp duty or registration charges while buying a property;
- Increasing cost: Since there is no GST for readily available Flats, Developers increase the cost of ready-to-move-in properties to take care of GST input cost.
- Cheaper property: With the applicability of GST, under-construction flats are still cheaper than readily available flats;
- One Nation One Tax: The Country’s notion was one nation one tax i.e. GST, which has subsumed many other state-level taxes.
Is GST on flat purchase under construction property?
Yes. GST is applicable for under-construction flat purchase. However, if you buy any flat which is ready to move in, you are not liable to pay GST on that property as GST is not applicable on immovable property.
Is there GST on flats below 45 lakhs?
Yes, GST is also applicable for flats below Rs. 45 Lakh. Any flats below Rs. 45 Lakh come under the affordable housing category with a GST rate @1%. But this flat should be in the under-construction category to be eligible to levy GST on it.
GST on Flat Purchase in India
GST on Flat Purchase in India: It is crucial to understand that GST applies only to under-construction properties. If the property you are going to buy is ready to move, no GST shall be charged to that property.
Therefore, GST is applicable only on the purchase of under-construction Flats, Apartments, Bungalows, and Developable properties.
GST on Purchase of Flat in India
As we have come to know a ready-to-move Flat, Apartment, Bungalow is not subjected to any GST. Now let us know the GST rate on purchase of flats in India.
From 1st April 2019, there have been only two GST rates on the purchase of under-construction properties. One is 1% and the other is 5%. As per the 33rd meeting of the GST Council, the revised GST rates are as follows:-
| Types of Property | GST rate up to 31.03.2019 | GST rate w.e.f 01.04.2019 |
| Affordable housing* | 8% with input tax credit (ITC) | 1% without ITC |
| Non-affordable housing | 12% with ITC | 5% without ITC |
*Affordable housing means: (i) For Metro Cities: The carpet area not more than 60 sq. Metre in Metropolitan Cities and valued less than Rs. 45 Lakh.
(ii) For other cities: The carpet area should not exceed 90 sq. Metre and valued less than Rs. 45 Lakh.
So, if any property is ready to move, GST can not be levied on that property in case of affordable or non-affordable properties.
Therefore, the above new GST rates shall apply to all the new projects. However, in that case, the Builders/ Developers are not entitled to receive any input tax credit of GST.
However, in the case of a ready-to-move property, it is exempted from GST only when the Developer can submit a full completion certificate issued by appropriate local authorities.
GST For Purchase of Flat at a Glance
- GST Applicability: Residential property with up to 15% of commercial space is treated as residential property under GST and is subjected to GST applicability;
- GST on Plots: For purchase of lands or plots, you are not required to pay any GST ;
- Ready to move: If you are buying a flat that is ready to move in, you are not required to pay any GST on the same;
- Commercial Property: The effective GST on commercial property is 12%;
- GST on Registration of Property: The introduction of GST does not negate the applicability of stamp duty on property registration. So you are required to pay stamp duty or registration charges while buying a property;
- Increasing cost: Since there is no GST for readily available Flats, Developers increase the cost of ready-to-move-in properties to take care of GST input cost.
- Cheaper property: With the applicability of GST, under-construction flats are still cheaper than readily available flats;
- One Nation One Tax: The Country’s notion was one nation one tax i.e. GST, which has subsumed many other state-level taxes.
FAQs on GST on Flat Purchase
Applicability of GST for flat purchase?
Yes. GST is applicable for under-construction flat purchase. However, if you buy any flat which is ready to move in, you are not liable to pay GST on that property. Rather the developer shall be required to pay GST on that property and claim input tax credit of GST.
Is GST applicable on ready to move in properties?
No, not at all. GST is not applicable for ready-to-move-in properties. If it is already a completed property to move in, it gets the status of immovable property and immovable property does not come under the purview of GST.
Is there GST on flats below 45 lakhs?
Yes, GST is also applicable for flats below Rs.45 Lakh. Any flats below Rs.45 Lakh come under the affordable housing category with a GST rate @1%. But this flat should be in the under-construction category to be eligible to levy GST on it.
How do I reduce GST on a flat purchase?
Practically there is no scope of reducing GST on flat purchase since the primary rate itself is very low i.e. @1% of the transaction price. However, what one can do is bargain with the promoter little bit for reduction of purchase cost, so that with that reduced cost you can make the GST payment to the Developer.
How to avoid GST on flat purchase?
GST is a Government of India levied tax and it can not be avoided. However, in order to avoid GST on flat purchase, one needs to check the following:
- Purchase a ready to move-in-flat;
- Purchase a second hand flat;
- Arrange a full completion certificate from appropriate local authority;
- GST is not applicable on purchase of land or plot.
How to calculate GST on flat purchase?
While determining how to calculate GST on flat purchase, one needs to consider the size and value of the property. Depending up on it, the GST rate shall be as follows:
| Types of Property | GST rate w.e.f 01.04.2019 |
| Affordable housing (Size up to 60 Sq. Mt. and value below Rs. 45 Lakh) | 1% without ITC |
| Affordable housing (Size up to 90 Sq. Mt. and value below Rs. 45 Lakh) | 1% without ITC |
| Non-affordable housing | 5% without ITC |
Calculation of GST on Affordable Housing
| Assume Cost of the Property is | Rs. 50,00,000.00 |
| GST on the Affordable Housing Segment | 1% |
| GST Value Per Sq. Ft | Rs. 50,000.00 |
| Price of the property after the GST | Rs. 50,50,000.00 |
