Indian Real Estate

GST On Real Estate Reduced For Homes and Under Construction Projects


07, January 2026

"Tax Break: Homes and Under Construction Projects Get a GST Boost!"

Bringing some good news to the investors in the Indian Real Estate Market, the GST Council which met on Feb 24th 2019 ,enforced a welcome revolutionary change in affordable housing and under construction residential projects.

The tax rates on projects under-construction and affordable housing have been reduced.

The revised GST Tax Slabs are:

• GST on under-construction flats has been reduced to 5% from the older 12%.

• GST on affordable homes has been effectively bought down to 1% from 8%.

These revised rates will be applicable from April 01-2019

After conducting an in-depth analysis of the current market conditions, it has become evident that the under-construction segments are experiencing a significant decline in sales, which has consequently led to a reduction in prices.

The reduction in GST 2019 aims to create more demand and eventually increase the sales of under construction or ongoing projects.

A strategic measure, regarded as a lifeline in the real estate sector, has been implemented to protect the interests of both developers and buyers facing vulnerability in the market.

The Carpet Area of a property is the basis for categorization of affordable houses, which varies based on the location they are located in.

• 90 sqm is the limit in non-metropolitan cities

• 60 sqm is the limit in the case of metropolitans.

GST rate on developable land

This was solidified by a circular issued by the Central Board of Indirect Taxes and Customs (CBIC) on August 3, 2022, affirming the exemption of GST on plot sales, regardless of the presence of certain foundational infrastructure.

Here are several favorable effects of GST on the real estate sector.

  • GST's implementation has streamlined the intricate tax framework of the past, simplifying it significantly.

  • Under GST, developers can leverage input tax credits for construction materials and services, effectively trimming construction costs and extending advantages to buyers.

  • By eliminating entry taxes, GST has paved the way for the smooth flow of goods and services across state borders.

In Both cases, residential properties with a price of 45 Lakhs being the roof fall under this category.

Metropolitan Cities in India include Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, and Faridabad), Hyderabad, Kolkata, and Mumbai (the whole of Mumbai Metropolitan region or MMR) and the rest of India falls under the Non-Metropolitan Category.

As per the latest Indian Real Estate news, this GST rate cut announced by the 33rd GST Council is a huge relief to the realty market which was in due duress and a solid move to boost the real estate sector, especially towards the middle, neo-middle class, and aspirational middle class. The government of India which has a very progressive initiative of ‘Housing for All by 2022’ is proactively working towards the same and understands the importance of the infrastructural development in the country.

Homes247.in Experts’ View

This move creates an overall cut of 7% on the total cost of purchasing property.

Aspiring homebuyers can now optimize their options to avoid heavy GST rates.

By the drop in the rate for under construction projects, it creates a healthy and motivated atmosphere for investments towards projects that are not complete yet.

Motivates developers to focus more on Affordable Housing both in Metro and Non-Metro Cities.

In the business world, cutting tax rates attracts massively, favourable investments which mean more investments will flow now into real estate.

An Intermediate tax on development rights and taxes on TDR, JDA, FSI* and Lease Premium are revoked.

Implementation of an input credit tax which will benefit customers highly might slightly affect the profits of the developers. Yet, developers need not worry as all these developments will only increase the overall revenues and business in the real estate market.

  • TDR -Transfer of Development Rights

  • JDA – Joint Development Agreements

  • FSI – Floor Space Index

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