Navigating GST on Property Purchases in India: What Buyers Need to Know

1. GST on Under-Construction Properties

For those purchasing an under-construction property, a GST rate of 5% applies. This rate is consistent across most property segments, making it a standard consideration for prospective buyers.

However, if you're looking into the affordable housing segment, you benefit from a reduced GST rate. Affordable housing properties attract a lower GST rate of 1%, provided they meet specific criteria.

2. Affordable Housing Segment

To qualify as affordable housing, the property must meet the following conditions:

• Total Value: Does not exceed ?45 lakh.
• Carpet Area: Up to 60 sq. meters in metropolitan regions and up to 90 sq. meters in non-metropolitan areas.

This reduction is part of the government’s initiative to make housing more accessible to a broader segment of the population.

3. GST on Ready-To-Move Properties

Good news for those buying ready-to-move-in properties: GST does not apply. This exemption simplifies the purchasing process and reduces the overall cost of acquiring a home that is already completed and available for immediate occupancy.

4. Inherited Properties

Inheritances are also GST-exempt. If you receive a property as an inheritance, you won't need to pay GST on its transfer, which helps ease the financial burden on heirs.

5. Income Tax Credit (ITC) and GST

It’s important to note that, as of the new tax regimes effective from 2019, the Income Tax Credit (ITC) on GST paid for under-construction properties is not available. This means that buyers cannot offset GST paid on under-construction properties against their income tax liabilities, impacting financial planning for those investing in property.

Understanding GST implications can help you make informed decisions and plan your finances effectively when purchasing property in India. With the right knowledge, you can navigate these tax norms to ensure a smoother buying experience.