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Crucial Insights into GST on Residential Property Sales

Blox Social
Posted on
Sep 20, 2023


The introduction of the Goods and Services Tax (GST) has heralded a transformative era in India's tax system, touching various sectors, including the real estate industry. Within this context, GST on the sale of residential property stands as a focal point, offering a blend of clarity and intricacy to the homebuying experience. In this blog, we explore vital facets surrounding GST on residential property sales, unravelling the tax implications, exemptions, and recent modifications. This discussion serves as a compass for both developers and prospective homebuyers navigating the ever-evolving landscape of GST regulations in the dynamic real estate sector.

Understanding GST on Sale of Residential Property

GST on the sale of residential property is a tax imposed by the Indian government on the supply of residential properties. It is crucial for homebuyers and developers to comprehend the intricacies of this tax to make informed decisions. Let's explore some essential insights:

  1. GST Rates and Categories

The GST rates for residential property sales vary depending on the type of property and its stage of construction. 

- For non-affordable properties: A 5% GST rate.

- For affordable housing projects: A reduced GST rate of 1%.

  1. Input Tax Credit (ITC)

Input Tax Credit (ITC) was initially a significant aspect of GST for developers. It allowed them to claim credit for the GST they paid on construction materials and services. However, ITC rules have evolved over time.

ITC benefits were primarily restricted to affordable housing projects. For other under-construction properties, developers could not pass on the ITC benefits to buyers, leading to a potential increase in the overall cost. This shift in ITC rules had a significant impact on the GST on sale of residential property.

  1. Affordable Housing Projects

Affordable housing has been a focal point of the government's housing policy, and it enjoys specific GST benefits. Affordable housing projects are eligible for a reduced GST rate of 1%. To qualify for this rate, properties must meet specific carpet area and value criteria.

  1. GST on Resale Properties

GST is not applicable to the sale of ready-to-move-in or completed properties where the completion certificate has been issued. This means that you won't have to pay GST if you're buying a property from an individual or entity after it's been constructed and the certificate is issued. This exemption is a critical aspect of GST on sale of residential property.

  1. Transition Provisions

When GST was initially introduced, transition provisions were put in place for properties under construction. These provisions allowed developers to make adjustments to their pricing to account for GST. However, these provisions may have evolved over time, emphasising the need to stay informed about the latest rules and regulations.

  1. State-Specific Stamp Duty and Registration Charges

While GST is a central tax, stamp duty and registration charges are imposed by state governments. These charges vary from state to state and can significantly impact the overall cost of a property transaction. Potential homebuyers should be aware of these state-specific charges in addition to GST on the sale of residential property.

  1. Ongoing Changes and Updates

Given the dynamic nature of GST laws and regulations, they are susceptible to adjustments in alignment with evolving government policies and economic scenarios. To ensure compliance and make informed decisions in residential property transactions, it is imperative to remain vigilant regarding the latest notifications. Moreover, seeking guidance from tax professionals or legal experts is a prudent approach to effectively navigate the intricate intricacies and potential changes within the GST framework, safeguarding one's interests in residential property dealings.


In conclusion, the impact of GST on the sale of residential property cannot be overstated in the Indian real estate arena. It is imperative for all stakeholders, including developers and homebuyers, to grasp the nuances of this tax regime, encompassing the prevailing GST rates, applicable exemptions, and the ever-evolving input tax credit provisions. Given the dynamic nature of the real estate sector, it remains paramount to remain abreast of the latest developments in GST laws and regulations. By proactively staying informed and seeking professional counsel when required, individuals can make well-informed decisions and ensure strict adherence to GST regulations within the residential property market, fostering transparency and compliance. When considering buying a new home, look through the wide selection of properties available on Blox.

Real Estate