GST Slab Rates in India F.Y. 2024-25 by Council
Revised GST Slabs in India
The Goods and Services Tax (GST) is one of the most transformative reforms in India’s taxation landscape, profoundly impacting various sectors, including real estate. Introduced in 2017, GST replaced a plethora of indirect taxes, creating a unified and transparent tax regime. By eliminating cascading taxes such as VAT, service tax, and excise duty, GST has streamlined compliance, making it easier for stakeholders to understand and navigate the tax system.
Since the implementation of GST, the real estate industry in India has transformed, focusing on simplifying taxation. GST helps reduce the tax burden and increase transparency in property deals. This guide delves into GST on flat purchases in 2025, addressing under-construction flats, ready properties, affordable housing rates, and the registration process.
GST on Flat Purchase in 2025
Developers can claim an input tax credit (ITC) on materials and services used during construction; however, passing on this benefit to buyers isn’t mandatory. Buyers should clarify with developers about any ITC benefits offered, as it can affect the final cost of the property.
- GST does not apply to ready-to-move properties with a valid occupancy certificate, as they are classified as completed goods, not services.
- If a flat lacks a completion certificate or has ongoing interior work, it could still be considered under construction and subject to GST.
- GST on property is not levied on the registration of completed flats in India. Properties with a valid Completion Certificate are exempt from GST.
- A Completion Certificate is a legal document issued by the local municipal or development authorities. It certifies that a building (flat or property) has been constructed as per the approved building plan and complies with local laws and regulations.
- The GST rate for new apartments under construction is set at 5%. The final cost of a new apartment can vary based on whether the developer passes the Input Tax Credit (ITC) benefit to the buyer.
- Developers can claim ITC on materials and labor used in construction, but passing this benefit to buyers is not mandatory.
- For flats priced above ₹50 lakhs, which generally fall outside the affordable housing segment, the GST rate is set at 5%, without the benefit of input tax credit (ITC). This applies specifically to under-construction properties, as GST is not levied on completed or ready-to-move-in properties
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Impact of GST on real estate:
Since the launch of the GST in 2017, investment in under-construction properties has become more hassle-fee for a common man, especially due to the end of the old tax regime under which such investments attracted a multitude of taxes. A unified tax regime – GST rate on real estate helps buyers have clarity on the kind of taxes they would have to pay at the time of home purchase.
Investment in affordable property has also got a major push with the government rationalising GST rate on affordable real estate.
From developers’ point of view too, the GST regime has been highly supportive. “Under the erstwhile regime, developers would be liable to pay a multitude of taxes such as VAT, Central Excise, Entry Tax, LBT, Octroi, Service Tax, etc., the credits of which were not freely available against the output tax liability. However, the GST regime provides for ITC eligibility on construction and other services procured, thereby eliminating the inefficiency ushered in by the cascading effect of taxes,” says a PwC Indian report.
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About GST on Real Estate
Here are a few points that you should remember about GST on real estate –
- According to GST laws, any residential property with a maximum of 15% commercial space will be classified as residential property.
- According to the GST tax structure, a commercial unit is subject to a 12% GST.
- Landowners are only required to pay GST if the tenant is a commercial firm, according to GST laws.
- In addition, GST is charged on services related to house loans, such as processing fees, legal fees, etc.
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Affordable Housing under GST?
The Indian government has a vision for accessible housing. It aspires to give all of the nation’s citizens access to housing. According to the plan, a property must meet the following requirements in order to be eligible for affordable housing:
- In either urban or rural areas, the total property worth must be less than or equivalent to Rs.45,00,000.
- In towns and cities that are non-metropolitan, the total carpet area of residential property must be less than or equal to 90 square meters.
- Key points to note for GST on high-value property purchases:
- 5% GST Rate: Applies uniformly to under-construction properties exceeding ₹45 lakhs, including those priced above ₹50 lakhs.
- No Input Tax Credit (ITC): Buyers do not receive ITC on properties under this rate, as developers are not required to pass on this benefit to buyers.
- The cost incurred on these taxes by builders was then transferred to the buyer. Moreover, the complexity involving rate applicability of the numerous taxes also made it possible for developers to manipulate numbers to charge more from buyers. For a common buyer, it used to be an uphill task to find out the VAT, Central Excise, Entry Tax, LBT, Octroi and service tax rate applicable on property construction.
As we enter 2025, the real estate sector continues to experience the far-reaching implications of GST. From simplifying the taxation process for developers to influence property affordability for homebuyers, GST plays a pivotal role in shaping market dynamics. This article delves into the updated GST framework for 2025, exploring its impact on stakeholders, emerging trends, and potential reforms expected to influence the sector further.
Improved GST Compliance Systems
The government continues to refine GST compliance mechanisms, making tax filing more streamlined and error-free:
- Enhanced Digital Invoicing: Developers and real estate firms now rely heavily on digital invoicing, which ensures transparency and minimizes discrepancies in tax reporting. By integrating software solutions, businesses can automatically generate GST-compliant invoices, reducing manual errors and fostering trust among stakeholders.
- AI for Tax Filing: Artificial Intelligence (AI) tools are increasingly being employed to automate complex calculations and flag potential anomalies in GST returns. This enables developers to focus more on business operations while maintaining compliance with minimal effort.
- Automation in ITC Reconciliation: Developers face challenges in reconciling Input Tax Credit (ITC) claims, particularly for mixed-use projects. Automation now simplifies this process by matching purchase invoices with GST returns, ensuring accurate claims and preventing penalties due to mismatches.
Technological advancements are playing a pivotal role in transforming the real estate sector, and GST compliance is no exception. The integration of cutting-edge technologies is expected to bring greater efficiency and transparency:
- Blockchain for Property Registration: Blockchain technology is increasingly being considered for property registration processes to reduce fraud and disputes. By creating an immutable record of transactions, blockchain ensures secure and transparent property ownership data. For developers, this could mean easier GST compliance, as blockchain enables accurate tracking of property sales and tax liabilities, reducing discrepancies in filings.
- Automated GST Systems: Automation tools powered by AI are becoming mainstream for GST compliance. These systems can reconcile invoices, flag discrepancies, and auto-generate returns, significantly reducing human errors. For instance, developers managing multiple projects can integrate their financial systems with GST filing portals, ensuring error-free submissions and timely refunds of Input Tax Credit (ITC).
