The Goods and Services Tax (GST) has significantly impacted the real estate sector in India. For homebuyers looking to purchase flats below 45 lakhs, understanding the applicable GST rates is crucial. The government has introduced special tax benefits for affordable housing to promote homeownership among the middle and lower-income groups.
GST Rate on Flats Below 45 Lakhs
As per the revised GST rates, flats below 45 lakhs fall under the affordable housing category and attract a lower GST rate. The applicable GST rates are:
- 1% GST for affordable housing projects under the new GST regime (without input tax credit).
- 5% GST for under-construction flats that do not qualify as affordable housing (without input tax credit).
- No GST on ready-to-move-in flats where the occupancy certificate (OC) has already been issued.
Criteria for Affordable Housing Under GST
To qualify as affordable housing and attract the lower 1% GST rate, a flat must meet the following criteria:
- Price: The flat should be priced at ₹45 lakhs or below.
- Carpet Area:
- In metropolitan cities (Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad) – up to 60 sq. meters (approx. 645 sq. ft.).
- In non-metropolitan cities – up to 90 sq. meters (approx. 970 sq. ft.).
GST Impact on Homebuyers
- Lower Cost for Affordable Flats – The 1% GST rate on flats below 45 lakhs ensures lower tax liability for buyers.
- No Input Tax Credit (ITC) – Builders cannot claim ITC, so they may adjust pricing accordingly.
- No GST on Ready-to-Move-In Properties – Flats with an occupancy certificate (OC) do not attract GST, making them more attractive for buyers.
- Reduced Overall Property Costs – The revised GST rates have helped stabilize the real estate market, encouraging more people to invest in affordable housing.
Key Benefits of Buying Flats Below 45 Lakhs
- Lower GST rate of 1% makes purchasing affordable flats cost-effective.
- Government incentives like PMAY (Pradhan Mantri Awas Yojana) for first-time homebuyers.
- No additional GST burden on completed flats with an OC, reducing overall costs.
- Increased availability of affordable housing projects in major and tier-2 cities.
Conclusion
The GST on flats below 45 lakhs has been structured to benefit homebuyers by reducing tax liability and promoting affordable housing. If you are planning to buy a budget-friendly flat, opting for a property under the affordable housing scheme can help you save significantly. Always verify the GST implications with the builder before making a purchase decision to ensure transparency in pricing.
By understanding the GST on flats below 45 lakhs, homebuyers can make informed decisions and take advantage of the government’s initiative to promote affordable housing in India.
Related Articles
Indian Economy and GST Impact
The GST tax is the biggest reform since Independence India. Thus, the new tax system is a great change of the indirect tax landscape of the country. more
GST Impact on Real Estate Sector
The GST on real estate purchases makes a big difference for affordable house buyers and non-affordable housing communities. more
Service Sector and GST Impact
The GST impact on the service sector was seen very high during the beginning of the GST implementation. more
Supply Chain In India & GST Impact
The new GST tax system has changed the entire tax process for the service industry. This is mainly due to the e-way bill system and e-invoicing during recent times. more