GST on Real Estate in India 2026: Rates, GST 2.0 Impact and Buyer Guide

GST on real estate in India applies only to under-construction properties. Rates are 1% for affordable housing (carpet area up to 60 sq m in metros / 90 sq m in non-metros, cost up to Rs 45 lakhs) and 5% for non-affordable or luxury residential properties — both without Input Tax Credit (ITC). Commercial properties are taxed at 12% with ITC. Ready-to-move homes with an Occupancy Certificate attract zero GST. GST 2.0 has reduced rates on key construction materials, impacting developer costs.

Goods and Services Tax (GST) has been one of the most significant tax reforms affecting Indian real estate since 2017. For homebuyers, understanding current GST rates, what applies to under-construction vs completed properties, and how GST 2.0 has changed the equation is essential before making a purchase decision.

This guide covers current GST rates on real estate in India 2026, the impact of GST 2.0 on construction materials, the 80/20 rule, rental property GST, and what it all means for buyers of apartments in Bengaluru, Chennai, and Hyderabad.

GST Rates on Real Estate in India 2026

KEY RULE: GST is calculated on the agreement value after deducting one-third of the total for land value. So for a Rs 90 lakh property, GST at 5% applies on Rs 60 lakhs (after deducting Rs 30 lakhs as land value) = Rs 3 lakhs GST.

GST on Under-Construction Properties

GST applies only when you buy an under-construction property — one that does not yet have a Completion Certificate (CC) or Occupancy Certificate (OC) from the local authority.

• Affordable housing: 1% GST — no Input Tax Credit for the developer.
• Non-affordable / luxury: 5% GST — no Input Tax Credit for the developer.
• Calculation base: Agreement value minus one-third (land deduction). GST is applied on the remaining two-thirds.
• No ITC pass-through: Since April 2019, developers cannot pass on Input Tax Credit to buyers — so the stated GST rate is the net rate you pay.

Is There GST on Completed / Resale Properties?

• Ready-to-move with OC/CC: Zero GST. If the property has received its Occupancy Certificate or Completion Certificate, no GST is applicable at the time of sale.
• Resale property: Zero GST. Secondary market transactions between individual buyers and sellers do not attract GST.
• Under-construction (before OC): 5% GST (non-affordable) or 1% GST (affordable) applies.

BUYER TIP: If you are looking to avoid GST entirely, buying a Brigade Group property that has already received its OC means zero GST liability. Check project status on the official RERA portal before booking.

GST on Flats Above 45 Lakhs and 50 Lakhs

• Flats priced above Rs 45 lakhs are classified as non-affordable housing under GST rules.
• For under-construction flats above Rs 45 lakhs: 5% GST applies (without ITC).
• For completed / ready-to-move flats above Rs 45 lakhs: 0% GST — no GST regardless of price.
• The Rs 45 lakh threshold is set by the central government for GST classification. States cannot change this threshold.

GST on Rental Property

• Residential rental to individual: No GST applicable.
• Residential property rented to a GST-registered business (for residential use): 18% GST under reverse charge mechanism — the tenant pays GST, not the landlord.
• Commercial property rental: 18% GST if the landlord's annual rental income exceeds Rs 20 lakhs.
• Short-term / holiday rentals via platforms: 18% GST may apply depending on the platform and booking structure.

What is GST 2.0 and How Does It Impact Real Estate?

GST 2.0 refers to the second phase of GST reforms in India, focused on rate rationalisation, simplification, and reducing cascading tax effects. For real estate, GST 2.0 primarily affects the construction input side — reducing GST on key materials used in building residential and commercial projects.

The core property GST rates (1% affordable / 5% non-affordable / 0% completed) remain unchanged under GST 2.0. What changed significantly is the GST on construction materials used by developers, which indirectly affects project costs and, in the medium term, property prices.

GST 2.0 Impact on Construction Materials

Reduced material costs give developers lower input expenses, which over time can translate into more competitive pricing on new launches — particularly in the premium and luxury segment where material costs are a larger proportion of total project cost.

The 80/20 Rule in Real Estate GST

• Developers must procure at least 80% of their construction inputs (materials + services) from GST-registered vendors.
• If procurement from registered vendors falls below 80%, the developer must pay 18% GST on the shortfall amount under the reverse charge mechanism.
• This rule ensures GST compliance throughout the construction supply chain and prevents tax evasion on unregistered vendor purchases.
• For buyers: a developer following the 80/20 rule is more GST-compliant and less likely to have tax irregularities that could affect property documentation.

Impact of GST on Real Estate Buyers and Developers

For Buyers

• Under-construction purchases attract 5% GST (non-affordable) — factor this into your total purchase budget.
• Ready-to-move purchases attract zero GST — a significant cost saving on higher-value properties.
• No ITC benefit is passed to buyers since April 2019 — the stated rate is the final rate.
• Section 80C tax benefit on registration charges remains available up to Rs 1.5 lakhs.

For Developers

• GST 2.0 material rate cuts reduce input costs — particularly for sand, aggregates, and green materials.
• The 80/20 rule requires disciplined procurement from registered vendors.
• No ITC on residential projects means GST paid on inputs is a direct cost — absorbed in project pricing.
• Commercial projects (12% with ITC) allow full input credit, making commercial real estate tax-efficient.

Brigade Group projects are fully GST-compliant with transparent documentation. Explore residential projects in Bengaluru, Chennai, and Hyderabad. For NRI investors, visit Brigade Group NRI Corner for GST and tax guidance specific to NRI purchases.

Conclusion

GST on real estate in India is a buyer-friendly structure for completed properties (zero GST) and an important cost factor for under-construction purchases. GST 2.0 has improved the economics for developers through material cost reductions, with potential benefits filtering to buyers over time. Whether you are buying your first home or making an investment decision, understanding the current GST structure will help you plan your finances accurately.

FAQ's

1. What is the GST rate on real estate in 2026?

In 2026, GST on real estate applies only to under-construction properties. The rates are: 1% for affordable housing (carpet area up to 60 sq m in metros or 90 sq m in non-metros, total cost up to Rs 45 lakhs) and 5% for non-affordable or luxury residential properties — both without Input Tax Credit (ITC). Completed homes with an Occupancy Certificate attract zero GST. Commercial properties are taxed at 12% with ITC.

2. Is there GST on flats above 50 lakhs?

Yes. Flats above Rs 50 lakhs (or more precisely, above Rs 45 lakhs) that are under construction attract 5% GST without Input Tax Credit. This applies to non-affordable housing. If the flat is a ready-to-move property with an Occupancy Certificate, no GST is applicable regardless of the price.

3. What is the new rule of GST on rental property?

GST on rental property depends on the type of rental: Residential rental to a private individual — no GST. Residential property rented to a GST-registered business entity for use as a residence — 18% GST (reverse charge mechanism). Commercial property rental — 18% GST if the landlord is GST-registered and turnover exceeds Rs 20 lakhs. Short-term rentals through aggregator platforms may attract 18% GST.

4. Is there any GST on sale of property?

GST on sale of property applies only to under-construction properties. If you are buying a ready-to-move property with a Completion Certificate (CC) or Occupancy Certificate (OC), there is no GST. For under-construction properties, the rate is 1% for affordable housing and 5% for non-affordable housing, calculated on the agreement value after deducting one-third for land value.

5. What is the 80/20 rule in real estate GST?

The 80/20 rule in real estate GST requires developers to procure at least 80% of their construction materials and input services from GST-registered vendors. If a developer sources less than 80% from registered vendors, they must pay GST on the shortfall at 18% on a reverse charge basis. This rule was introduced to ensure tax compliance throughout the construction supply chain.