GST on Residential Real Estate – 2019: All You Need to Know

To boost the residential segment of the real estate sector, GST Council has reduced the GST on residential properties significantly to 1% on Affordable Housing and to 5% on all other residential properties. Not just that, but the GST Council redefined Affordable Housing in favor of Buyers. This is a welcome change and is expected to help Residential Real Estate sector.

GST on Residential Properties Reduced - to 1% on affordable housing and 5% on all other

GST on Residential Properties Reduced – to 1% on affordable housing and 5% on all other

When does GST apply on Residential Real Estate?

Not everything you pay towards the Residential Property comes under the scope of GST. Here is what is considered for GST:

  • Only on the basic cost of the property including Land + Cost of Construction
    • Land does not come under GST but the GST rates stated everywhere are composite when 1/3rd of the cost is allocated to land; GST levied on rest and stated as a composite cost. For example: Until 31st March, 2019 – (a) there was no GST on land and 1/3rd of the total cost is used as a standard to calculate the value of land (b) there was 18% GST on construction cost. So the math was 0% on 1/3rd + 18% on 2/3rd = 12% on total and this composite 12% has been stated as the GST rate on Real Estate.
    • Basic Cost does not include other charges such as EB connection charges, Association charges etc.
  • Only on ‘under construction’ properties. Once occupancy certificate is obtained, the property is no longer considered to be under construction and GST does not apply.

1% GST on Affordable Housing:

Don’t be confused with the name Affordable Housing. For the purpose of GST, many Apartments qualify for Affordable Housing and please check this.

  • Metros:
    • Metropolitan Cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR)
    • If value of your property is ₹45L or less [AND] if the carpet area is 60 sq.mt or less (645 sq.ft or less), then your property qualifies as affordable housing.
  • Non-Metros: All other places that are not Metros, will be considered Non-Metros.
    • If value of your property is ₹45L or less [AND] if the carpet area is 90 sq.mt or less (968 sq.ft or less), then your property qualifies as affordable housing.
  • It’s the Carpet Area that counts: Generally, the carpet area is 70% of the super built-up area (aka saleable area). As a rule of thumb, if you are in metros, 920 Sq.Ft saleable area (most likely a nice 2BHK) under ₹45L qualifies for 1% GST.

5% GST on In General:

If your property does not qualify for Affordable Housing, then GST is 5%.

Cheatsheet:

Herre cheatsheet with all of this on flow chart.

GST on Real Estate 2019 - Flow Chart
GST on Real Estate 2019 – Flow Chart

Remember, these rates apply from 1st April, 2019 onwards. Happy Investing!


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