Real Estate Sector After One Year of GST

The Goods and Service Tax(GST) effectively rolled out by the Indian Government which is the revolutionary tax reformed system. Its been a one-year now, when Modi Government introduced the GST with President Pranab Mukherjee, with Prime Minister Narendra Modi and Finance Minister Arun Jaitley, which seeks to transform India with its “One Nation, One Market, One Tax “principle.  It has replaced multiple taxes like Octroi, VAT, Central Excise Duty tax, Service Tax, etc.

All under-construction properties have to pay 12% of GST. However, GST will not be applicable for ready-to-move properties. According to GST, it is the tax system which collects all the tax across the nation is called as CGST, IGST, and SGST. But the real estate sector is different in nature. Considering the fact, that the goods come under the real estate sector are immovable properties which are locked up due to its nature and its difficult to consider as a taxable entity. To tackle this situation, the GST council has taken a new step, which wipes off on 18 percent GST on real estate which comes down the tax rate 12 percent.

GST Rates:

For Resale flats and Properties:  According to para 5(B) of Schedule 2 of the CGST Act, 2017, there will be no GST on completed properties, resale properties or flats.

For Under Construction Properties: Before a year, the consumer has to pay stamp duty and registration charges. In MAHARASTRA, there is 1% VAT on agreement value is applicable. After that VAT is subsumed under GST. All the under construction properties charged up to 12 percent of the agreement value.

For Properties Purchased under Subsidy: The ready-to-move properties, flats or any other residential properties which are purchased under the Credit-Linked Subsidy Scheme(CLSS) invite up to 12 percent of GST. The applicable is 8% after cutting the one-third amount of the total cost of the land.

For Rental Properties: GST is leviable only if aggregate turnover is more than 20 lakhs. All the residential properties which are rented out do not come under the GST taxation. Earlier service tax for commercial leases was 15 percent. But after GST, leasing of commercial properties is taxable up to 18 percent.

Impact on Developers:

The biggest benefits of the real estate sector under GST regime is input tax credit to Developers. They can now avail for taxes paid on construction materials and services. Developers earlier charged by Central excise duty, VAT and entry charge on construction material cost collected by the State Government. They have to pay 15% tax on architecture fees, approval charges, layout charges, legal charges, etc. So the implementation of GST will result in lower construction costs. GST has streamlined tax administration of the real estate sector.


Real estate sector is one of the most pivotal sectors, as it contributes up to 5-6% of GDP of Indian Economy after Agriculture and Information Technology. Implementation of GST minimized the unscrupulous transactions. It has brought a lot of relief and transparency in the real estate sector. This is really effective and beneficial to home buyers and consumers. Due to GST, it had been seen a lot of accountability to the consumer.  According to the reports, property prizes fallen down to 3 percent. In the launching of the new project, there is a slight growth by 3 percent and 5 percent in Mumbai and Pune respectively after the implementation of RERA and GST. The launch of GST stirred a lot of hubbub in the corporate sector. India Inc gave a mixed response to this indirect tax system.