In India, the Goods and Services Tax (GST) has been a game-changer for the real estate sector, particularly for under construction properties. With effect from 1 April 2019, GST on under-construction residential property sold by a promoter is 1.5% (0.75% CGST + 0.75% SGST) for affordable residential apartments and 7.5% (3.75% + 3.75%) for other residential apartments, without input tax credit (Notification No. 3/2019-Central Tax (Rate) amending Notification No. 11/2017-CT(R); SAC 9954). One-third of the consideration is deemed to be the value of land under paragraph 2 of the notification, so the effective rates are 1% and 5%. "Affordable residential apartment" means a carpet area of up to 60 sq m in a metropolitan city or 90 sq m elsewhere, with the gross amount charged not exceeding ₹45 lakh. The earlier 18% rate — effective 12% after the one-third land deduction, with ITC — applied only up to 31 March 2019; promoters of ongoing projects who opted for the old rates by 10 May 2019 continue at an effective 8%/12% with ITC. The HSN/SAC code for these services is 9954.
The GST rate and HSN/SAC code are crucial for developers, buyers, and tax professionals to understand the tax implications of under construction properties. The following table provides a brief description of the goods/services, applicable GST percentage slab, relevant HSN/SAC code, and effective date of rate:
| Goods/Services | GST Percentage Slab | HSN/SAC Code | Effective Date of Rate |
|---|---|---|---|
| Under-construction residential apartment (promoter) | 1.5% affordable / 7.5% other residential (no ITC); effective 1% / 5% after the deemed one-third land deduction | 9954 | 1 April 2019 |
To calculate the total GST amount for an under construction property, you can use our calculator widget. Simply input the base price of the property, and the widget will calculate the total GST amount.
The GST tax structure for under construction properties can be complex, with different tax implications depending on whether the developer opts for the composition scheme or the regular scheme. The composition scheme is available for developers with an annual turnover of up to ₹1 crore, while the regular scheme is applicable for developers with an annual turnover exceeding ₹1 crore.
The following table provides a comparison of the tax implications under the composition scheme and the regular scheme:
| Scheme | GST Rate | Input Tax Credit (ITC) | Compliance Requirements |
|---|---|---|---|
| Ongoing projects (old-rate option) | 18% with ITC — effective 12% after the deemed one-third land deduction (8% for affordable) | ITC available | Option had to be exercised by 10 May 2019 |
| Regular Scheme | 18% (effective rate 12% after 1/3rd deduction towards land value) | ITC available on input services and goods | Regular compliance requirements, monthly/quarterly returns |
Prior to the introduction of GST, the tax regime for under construction properties was complex, with multiple taxes levied by the central and state governments. The pre-GST tax regime included service tax, value-added tax (VAT), and stamp duty, among others.
The following table provides a comparison of the pre-GST tax regime and the GST tax regime for under construction properties:
| Tax Regime | Tax Rates | Compliance Requirements |
|---|---|---|
| Pre-GST Tax Regime | Service tax: 15%, VAT: 1-5%, Stamp duty: 5-7% | Complex compliance requirements, multiple returns |
| GST Tax Regime | 1.5% affordable / 7.5% other residential (no ITC), effective 1%/5% after the land deduction | Simplified compliance requirements, single return |
The following FAQs address common queries related to ITC and compliance for under construction properties:
To avoid common billing mistakes and ensure compliance with GST regulations, developers and buyers should:
In conclusion, the GST tax regime for under construction properties in India is complex, with different tax implications depending on the scheme opted by the developer. It is essential for developers, buyers, and tax professionals to understand the tax implications, compliance requirements, and ITC provisions to avoid common billing mistakes and ensure compliance with GST regulations.
18% (effective rate 12% after 1/3rd deduction towards land value)
9954
July 1, 2017
Developers, buyers, and tax professionals
By deducting 1/3rd of the value towards land
Rate position checked against the CBIC rate notifications (Notification No. 11/2017-Central Tax (Rate) as amended, and the September 2025 notifications No. 09/2025 to 17/2025-Central Tax (Rate), effective 22 September 2025) and the GST Council\u2019s 56th meeting recommendations.
