Understanding GST on residential property is crucial whether you’re buying your first home, renting an apartment, or selling property in India. Since the Goods and Services Tax (GST) implementation in 2017, property transactions have specific tax implications that every homeowner, tenant, landlord, and investor must understand.
This comprehensive guide explains GST applicability on residential property across rent, purchase, and sale scenarios, helping you navigate tax obligations and exemptions effectively.
What is GST and How Does it Apply to Real Estate?
GST (Goods and Services Tax) is an indirect tax levied on the supply of goods and services in India. In real estate, GST applies differently based on:
- Type of property: Residential vs. commercial
- Stage of construction: Under-construction vs. ready-to-move (completion certificate issued)
- Transaction type: Purchase, rent, or sale
- Seller/landlord status: Individual vs. registered builder/developer
Key GST Rates in Real Estate (As on Jan 08, 2026):
- Affordable Housing: 1% (without Input Tax Credit – ITC)
- Non-Affordable Housing: 5% (without ITC)
- Commercial Property: 12% (with ITC)
GST on Renting Residential Property
Is GST Applicable on Rent of Residential Property?
Generally, NO. GST is NOT applicable on residential property rent for individual landlords and tenants. Here’s why:
Exemptions for Residential Rent:
- Notification No. 12/2017: Residential accommodation rent is exempt from GST under the Central Tax (Rate) Notification. An amendment in 2022 (Notification No. 04/2022-Central Tax (Rate)) modified this for residential dwellings rented to a GST-registered recipient. Under the Reverse Charge Mechanism (RCM), if a landlord is not GST-registered and rents to a GST-registered person, the tenant must pay 18% GST. A 2023 clarification (Notification No. 15/2022-Central Tax (Rate)) stated RCM doesn’t apply if a registered proprietor rents for personal residence, and it’s not a business expense. The exemption specifically applies to using the property as a “residence”; commercial use is typically taxed at 18%.
· Individual Landlords: If you’re renting out your residential property as an individual (not a business), GST does not apply—regardless of rent amount.
· No Threshold Limit: Unlike service tax (pre-GST), there’s no threshold of ₹10 lakh for residential rent exemption.
When IS GST Applicable on Residential Rent?
GST on renting residential property applies in specific commercial scenarios:
1. Hotels, Guest Houses, Hostels
- GST Rate: 12% (on room tariff)
- Applies to: Hotels, lodges, inns, guest houses, clubs, campsites
- Exemption: Rooms with tariff below ₹1,000 per day are GST-exempt
2. Corporate Lease/Company Accommodation
If a company leases residential property for employee accommodation:
- GST Rate: 18% (treated as service to company)
- Taxpayer: Company must pay GST, not the landlord (reverse charge mechanism)
3. Serviced Apartments (Residential-Cum-Commercial Use)
- Properties offering hotel-like services (housekeeping, meals, laundry)
- GST Rate: 18%
GST on Commercial Property Rent
For commercial spaces (offices, shops, warehouses):
- GST Rate: 18%
- Applies when: Annual rent exceeds ₹20 lakh (₹10 lakh for special category states)
- Registered landlords must collect GST and file returns
GST on Purchase of Residential Property
Under-Construction Property (Most Common GST Scenario)
GST IS applicable on under-construction residential property purchases:
GST Rates (Effective from April 1, 2019):
| Property Type | GST Rate | Conditions |
| Affordable Housing | 1% (without ITC) | Carpet area ≤60 sqm (metro) or ≤90 sqm (non-metro); Price ≤₹45 lakh |
| Non-Affordable Housing | 5% (without ITC) | All other residential properties |
Key Points:
- GST is charged on the total property value (including land component)
- No Input Tax Credit (ITC): Buyers cannot claim ITC on GST paid
- Builder’s Responsibility: Developer collects GST and deposits with government
- Includes: All payments—booking amount, instalments, possession charges
Ready-to-Move Property (Completion Certificate Issued)
GST is NOT applicable on:
· Resale properties: Buying from individual sellers (second-hand homes)
· Ready-to-move flats: With an Occupation Certificate (OC) or Completion Certificate (CC) issued
· Independent houses: Constructed and ready for occupation
Why No GST?
- Sale of immovable property (land/buildings) after completion is exempt under GST law
- Only construction services attract GST, not sale of completed property
What About Stamp Duty and Registration?
Important: Even if GST is not applicable, buyers must pay:
- Stamp Duty: 5-7% (state-dependent)
- Registration Charges: 1%
- These are separate from GST
GST on Sale of Residential Property by Individual
Individual Selling Residential Property: GST Exemption
Good News: If you’re an individual homeowner selling your residential property, NO GST applies, regardless of property value or profit earned.
Why No GST?
- Sale of immovable property (land, buildings, flats) is excluded from GST under Schedule III of CGST Act
- This applies to both:
- Primary sale (individual selling own home)
- Resale (selling purchased property)
When GST Applies on Property Sale
GST IS applicable if the seller is a:
1. Real Estate Developer/Builder
- Selling under-construction property: 1% (affordable) or 5% (non-affordable)
- Selling commercial property: 12%
2. Registered Business Entity
- Company selling property as part of business operations
- GST Rate: 18% (if treated as a service)
3. Developer Transferring Development Rights
- Transferring Transferable Development Rights (TDR), Floor Space Index (FSI), or Joint Development Agreements (JDA)
- GST Rate: 18%
GST on Land Purchase
Sale of land is EXEMPT from GST:
· Agricultural land
· Residential plots (for self-construction)
· Commercial land
Exception: GST applies if land is sold along with development rights or as part of a development agreement.
B&B Properties Advantage: Our Windchimes Villas plotted development offers DTCP & RERA-approved plots with complete GST transparency.
Input Tax Credit (ITC) in Real Estate
Can Buyers Claim ITC on Property GST?
NO. Under the current GST regime (post-April 2019):
- Buyers of residential property cannot claim Input Tax Credit
- GST is charged without ITC at reduced rates (1% or 5%)
Why the Change?
- Pre-April 2019: Builders could claim ITC and charged 12% GST (with ITC)
- Post-April 2019: Government removed ITC benefit but reduced rates to 1%/5%
- Benefit to Buyers: Lower GST burden despite losing ITC
Who Can Claim ITC?
- Builders/Developers: On inputs like cement, steel, contractor services (subject to conditions)
- Commercial Property Buyers: Can claim ITC on GST paid (at 12%)
GST on Property-Related Services
While property transactions may be exempt, services related to real estate attract GST:
| Service | GST Rate | Applicability |
| Brokerage/Commission | 18% | On real estate agent fees |
| Property Management | 18% | Maintenance, RWA services |
| Interior Design | 18% | Design and execution services |
| Architecture Services | 18% | Architectural plans, consultancy |
| Legal Services | 18% | Property lawyer fees |
| Home Loan Processing | 18% | Bank processing fees |
At Windchimes Villas, our managed community services include transparent billing with GST compliance for all property management charges.
State-Wise Stamp Duty Variations
While GST is uniform across India, stamp duty varies by state. Below is a table of the rates in some states of India.
| State | Stamp Duty | Additional Notes |
| Tamil Nadu | 7% | Women buyers: 6% |
| Maharashtra | 6% (urban), 5% (rural) | Women: 1% discount |
| Karnataka | 5% | Women: 2% discount |
| Telangana | 4-6% | Depends on property value |
| Delhi | 6% | Women: 4% |
Recent GST Amendments in Real Estate (2024-2026)
Key Changes:
- Extended Timelines: Government extended transition period for ongoing projects to opt for new GST rates (1%/5%)
- ITC Clarifications: Builders cannot claim ITC on goods/services used for construction after March 31, 2019
- Joint Development Agreements: GST on land cost in JDAs clarified—18% on developmental rights transfer
What This Means for Buyers:
- Stable Rates: 1%/5% GST likely to continue
- No Surprise Taxes: Clearer regulations prevent mid-project rate hikes
- Builder Accountability: Stricter compliance reduces tax evasion
Conclusion
Understanding GST on residential property ensures you make informed decisions and avoid tax surprises. Key takeaways:
· Residential rent: GST-exempt for individuals
· Under-construction property: 1% (affordable) or 5% (non-affordable) GST
· Ready-to-move & resale: No GST
· Land/plot purchase: No GST
· Individual property sale: No GST
