By Arosh John | Founder – John Real Estate (MahaRERA Reg. No. A51700001835) | Editor-in-Chief – Thane Real Estate News (TREN)
Thane & Mumbai | November 2025
When you buy a property before the builder obtains a Completion or Occupation Certificate (OC), the transaction is subject to Goods and Services Tax (GST).
Under the GST law, such a purchase is treated as a supply of services by the developer and is subject to GST. Once the OC is issued, that sale becomes a transfer of immovable property — outside the scope of GST.
1 | When GST Applies
- Under-construction purchase from builder or developer: GST applies.
- Ready-to-move or resale (OC issued / individual-to-individual): No GST on the property price.
(Stamp duty and registration remain payable separately.)
2 | Current GST Rates for Residential Property (Valid 2025)
(As per the 33rd and 34th GST Council decisions, effective April 1 2019 — still applicable as of November 2025.)
| Category | GST Rate | Input Tax Credit (ITC) | Eligibility Criteria |
|---|---|---|---|
| Affordable Housing | 1% | Not available | Carpet area up to 60 square metres in metros or up to 90 square metres in non-metros and value up to ₹ 45 lakh |
| Other Residential | 5% | Not available | All other residential units outside affordable limits |
“Metro” includes the entire Mumbai Metropolitan Region (MMR), so Thane and Mumbai fall within this definition.
Both 1% and 5% slabs are without ITC — builders cannot claim or pass input-tax credit benefits to buyers.
3 | GST on Commercial Property (Shops, Offices, Showrooms)
GST on commercial units depends on whether the project qualifies as a Residential Real Estate Project (RREP).
| Project Type | GST Rate | ITC | Key Condition |
|---|---|---|---|
| RREP (Residential Real Estate Project) | 5% | Without ITC | Commercial carpet area not more than 15% of the total project carpet area |
| Non-RREP (Commercial or Mixed-Use Project) | 12% | With ITC | Commercial carpet area more than 15% of the total project carpet area |
Key Points
- Applicable only when buying an under-construction unit from a builder or developer.
- Registered businesses purchasing such units may claim ITC only under the 12% regime.
- Once an OC is issued or the property is resold, the sale is exempt from GST under Schedule III of the CGST Act — no GST is payable on the price.
4 | GST on Resale Property
All resale transactions, whether residential or commercial, are outside GST because the sale of a completed property between individual owners is not a supply of goods or services.
Buyers only pay stamp duty and registration charges.
5 | When GST Does Not Apply
- Sale of a completed building (after OC or first occupation).
- Any resale transaction (between individuals).
- Under GST valuation rules, one-third of the total property value is deemed to represent the land component, which is automatically excluded from tax. GST is levied only on the remaining two-thirds of the transaction value as per Notification No. 11/2017 – Central Tax (Rate), as amended on April 1 2019.
6 | Impact on Total Cost
Example 1 – Affordable home ₹ 40 lakh: GST = 1% = ₹ 40 000
Example 2 – Standard home ₹ 80 lakh: GST = 5% = ₹ 4 lakh
Example 3 – Commercial unit ₹ 1 crore (RREP): GST = 5% = ₹ 5 lakh (without ITC)
Example 4 – Commercial unit ₹ 1 crore (Non-RREP): GST = 12% = ₹ 12 lakh (with ITC)
(All figures exclude stamp duty and registration.)
7 | Relation with Stamp Duty and Registration
GST and stamp duty are separate:
- GST – Central levy (on under-construction sales from builders).
- Stamp Duty and Registration – State levies (on all property transactions).
Both apply independently, depending on the nature of the sale.
8 | Common Misunderstandings
- “GST applies to ready flats.” ❌ – Not after OC.
- “Any low-priced unit gets 1% .” ❌ – Must meet both price and area limits.
- “Developers can give ITC.” ❌ – Not under the 1% or 5% residential rates.
- “All commercial units are 12% ” ❌ – Only if non-RREP; RREP commercial units are 5% .
- “Rates differ by state.” ❌ – GST is nationally uniform; stamp duty is state-specific.
Quick FAQs
Q1. Is GST applicable to resale property?
No — resale transactions are outside GST.
Q2. What are the current rates for under-construction homes?
1% (affordable) and 5% (other residential), both without ITC.
Q3. What is the rate for commercial units?
5% without ITC if within an RREP (commercial area not more than 15%), 12% with ITC for non-RREP projects.
Q4. Do these rates apply in Thane and Mumbai?
Yes — these national slabs apply across Maharashtra, including the MMR.
Q5. Have these rates changed recently?
No — as of November 2025, the 1%, 5% and 12% structures remain unchanged; recent Council discussions covered construction materials, not property GST rates.
About the Author
Arosh John is the Founder of John Real Estate (MahaRERA Reg. No. A51700001835), Editor-in-Chief of Thane Real Estate News (TREN), and widely recognised as The Real Estate Expert of Thane. With over a decade of hands-on experience advising buyers, investors and NRIs across Thane’s residential and villa markets, Arosh combines on-ground transaction expertise with regulatory clarity to translate complex property laws into simple, data-driven insights for the public. He is known for bridging professional real-estate advisory and fact-checked property journalism in India.
Disclaimer
This article is published for educational and public awareness purposes under Thane Real Estate News (TREN). All rates and definitions are based on official GST Council and CBIC notifications (33rd and 34th Council Meetings, effective April 1 2019, and continuing through 2025). Readers should verify project-specific eligibility and tax clauses with their developer and refer to the official GST portal before final registration.
