GST 2025: Impact on Real Estate, Tax Rates, and Calculation.

swetha
Jun 2
2 min read

The introduction of the Goods and Services Tax (GST) revolutionized the Indian real estate sector by bringing transparency and uniformity to property taxation. In 2025, GST continues to play a significant role in shaping property prices, buyer sentiments, and project viability. This article explores the current GST impact on real estate, applicable tax rates, and how buyers and developers can calculate and manage GST obligations.

When is GST Applicable in Real Estate?

GST is not applicable to all property transactions. It mainly applies to:

Under-construction residential and commercial properties
Works contracts
Affordable housing schemes

However, GST is not applicable in the following cases:

Completed properties with a completion certificate
Resale of ready-to-move-in properties
Sale of land or plot without construction

GST Rates on Real Estate in 2025

As per the current tax structure, the following GST rates are applicable in the real estate sector:

Property Type	GST Rate	Input Tax Credit (ITC)
Affordable Housing (Under-construction)	1%	Not Allowed
Other Residential Housing (Under-construction)	5%	Not Allowed
Commercial Property (Under-construction)	12%	Allowed
Completed Projects (with CC)	0%	Not Applicable
Sale of Land	0%	Not Applicable

Affordable housing includes homes priced up to ₹45 lakhs and measuring up to 60 sq.m. in metros and 90 sq.m. in non-metros.

GST Calculation on Property Purchase

Here’s how GST is calculated on an under-construction residential property:

Example:

Property Cost: ₹80,00,000
Applicable GST Rate: 5% (non-affordable housing)
Land Value Deduction: 33% of total cost (as per GST norms) = ₹26,40,000
Taxable Value: ₹80,00,000 - ₹26,40,000 = ₹53,60,000
GST Payable: ₹53,60,000 × 5% = ₹2,68,000
Total Cost to Buyer: ₹82,68,000

Note: No input tax credit (ITC) is available on residential units.

GST’s Impact on Real Estate in 2025

For Homebuyers:

Clarity and Transparency: GST eliminates multiple indirect taxes, offering a more transparent cost structure.
Cost Considerations: Since ITC is not available for residential buyers, under-construction properties might be slightly costlier than ready-to-move-in options.
Affordable Housing Benefits: The reduced 1% GST rate continues to promote budget-friendly housing.

For Developers:

Compliance Requirements: Developers must maintain detailed tax records, invoices, and file regular GST returns.
Cash Flow Planning: GST liabilities must be managed carefully to avoid funding delays or legal complications.
Impact on Pricing: Without ITC, developers may absorb some tax costs or pass them on to buyers depending on market dynamics.

Tips for Buyers

Prefer Completed Projects: Save on GST by choosing ready-to-move-in properties with a completion certificate.
Check Project GST Status: Always verify if the builder is GST-compliant and if the price quoted includes tax.
Affordable Housing Advantage: Look for homes that fall under the affordable housing criteria to benefit from the 1% GST rate.

Final Thoughts

GST has reshaped how the real estate industry functions, especially in the under-construction housing segment. While it adds a transparent tax layer, understanding its nuances is essential for both buyers and builders.

At Sitril Property Management, we guide clients through every step of the property transaction process — from pricing to documentation — ensuring transparency, compliance, and peace of mind. If you're planning to buy, sell, or invest in property in Chennai or Coimbatore, our expert team is here to help you make informed decisions in the GST era.