GST 2025: A Complete Guide for Discerning Property Buyers

By lodha

With the introduction of the Goods and Services Tax (GST) in 2017, India’s indirect taxation landscape underwent a profound transformation. The sector was once burdened by a web of taxes and was among the most affected. In light of the Union Budget 2025, which reaffirmed the prevailing GST framework while hinting at potential refinements, understanding its continued impact on real estate remains vital, particularly for discerning homebuyers and industry stakeholders across markets like the Mumbai real estate market, Bangalore real estate market, and Pune real estate market.

Applicability of GST on Real Estate: What You Must Know

A key consideration for any homebuyer is whether GST applies to the property in question. GST is levied only on under-construction properties; completed or ready-to-move-in homes, classified as immovable property, are exempt. Similarly, GST does not apply to resale properties or standalone land transactions.

Addition: With the introduction of GST 2.0, buying property has become simpler, as the revised framework streamlines processes, reduces compliance burdens, and brings greater clarity on applicable rates.

GST Rates Applicable to Property Types

Note: ITC = Input Tax Credit, which is disallowed under 1% and 5% slabs.

How is GST Calculated on a Property?

GST is charged only on the construction component of the property. Since land is exempt from GST, the government assumes that 33% of the agreement value accounts for land, and thus, GST is applied to the remaining 67%.

Formula for GST Calculation:

Total GST = CGST + SGST

Example:
 Let’s say a developer quotes the base price (excluding GST) as ₹10,000.

• Deduct land value (33%): ₹3,300 (non-taxable component)
• Taxable construction value = ₹6,700
• Apply GST @ 5%:

CGST @ 2.5% = ₹167.50
 SGST @ 2.5% = ₹167.50
 Total GST = ₹335
 Total payable (excluding stamp duty & registration) = ₹10,335

(Assuming GST is added over and above the base price)

Addition: Thanks to new GST rates 2025, the cost of cement and construction materials is now taxed at 18%, effectively lowering construction costs and benefiting homebuyers. This is part of the GST on construction materials 2025 update.

Addition: Furthermore, essential goods such as health insurance and daily essentials now attract zero GST, highlighting the broader benefits of the updated GST framework.

Key Impacts of GST on Real Estate in 2025

1. Simplified Taxation Structure
    GST replaces a multi-tax regime, consolidating VAT, service tax, and excise duty into a single framework.
2. Greater Transparency
    Uniform tax rates reduce ambiguity, offering buyers a clearer understanding of costs.
3. Loss of Input Tax Credit (ITC)
    Under the 1% and 5% GST regimes, developers cannot claim ITC, which may impact project economics and, in some cases, the final price offered to buyers.
4. Commercial Property Benefits
    Projects under the 12% regime (with ITC) continue to enjoy input cost adjustments, especially in office and retail developments.

6 Steps to Ensure GST Compliance When Buying a Flat

1. Confirm the Property Type
    GST applies only to under-construction homes. Completed and resale properties are not subject to GST.
2. Verify the Completion Certificate
    If a project has received its completion certificate, it is legally exempt from GST. Request documentation before making payments.
3. Identify the Correct GST Rate
    Know whether your property falls under affordable or non-affordable housing, as this directly impacts the GST rate (1% or 5%).
4. Understand GST on Added Costs
    Charges for parking, club access, and maintenance may also attract GST. Check whether these are included or billed separately.
5. Check for ITC Benefits (Old Regime)
    If your developer is using the old 8% or 12% regime with ITC, ensure that the benefit is being transparently passed on.
6. Seek Legal Guidance
    Consult a legal expert or tax advisor to review GST-related clauses in your agreement before finalising the transaction.

GST Formula for Homebuyers

Property Taxable Value (GST) = Tax Rate × Capital Value

Capital Value = Base Value × Total Carpet Area × Building Type × Age Factor × Usage Factor × Floor Factor

• Base Value: Ready reckoner rate of that particular area
   
• Building Type: Residential or commercial
   
• Age Factor: Time since construction
   
• Usage Factor: Residential or commercial usage
   
• Floor Factor: Floor on which the property is located

This forms the foundation of property tax calculation Mumbai and allows buyers to accurately estimate their tax obligations.

Unlocking the Benefits of GST Online

Using the BMC property tax calculator and making payments online ensures efficiency, accuracy, and transparency. Paying your dues digitally saves time, reduces errors, and generates instant receipts, which are useful for personal records and filing taxes. Online payments also allow buyers to benefit from minor rebates and discounts, making it a practical and profitable option.

Addition: The GST new rate list 2025 ensures buyers are aware of applicable rates and can plan their investments better, creating a more informed and confident purchasing experience.

Why GST Knowledge Matters for Homebuyers

As one of the most influential cost considerations in home buying, the GST impact on real estate continues to shape pricing and buyer sentiment. For those planning to invest in under-construction real estate in 2025, understanding GST—especially GST changes 2025—is essential for budgeting accurately and making confident, informed decisions in a transparent market.

Lodha: Making Your Property Journey Seamless

At Lodha, we believe in empowering homebuyers with clarity, transparency, and world-class living experiences. Our developments across Mumbai, Pune, and Bangalore combine prime locations, luxury amenities, and meticulous attention to compliance—including GST clarity. With Lodha, investing in under-construction properties is effortless, allowing you to focus on what truly matters: your home and lifestyle.