GST on Real Estate & Construction

CGST Rate Notification 3/2019-CT(Rate) effective 1 April 2019: affordable residential apartments (carpet area ≤ 60 sq.m in metro / 90 sq.m elsewhere AND value ≤ ₹45 lakh) — 1% GST (no ITC). Other residential apartments under construction — 5% GST (no ITC). Commercial properties under construction — 12% GST (with ITC). Completed and ready-to-move apartments (OC/CC received before first occupation) — exempt from GST.

Post-April 2019: developers at 1%/5% cannot claim ITC on construction inputs (cement, steel, labour, architect fees). Under the old 12% regime (pre-April 2019), developers could claim ITC. The rate cut was accompanied by ITC reversal to avoid the developer profiting on both lower rate and ITC retention. Transition projects (OC not received by 31 March 2019): developers had a one-time option to stay at 12% with ITC or switch to 1%/5% without ITC.

Section 7 read with Schedule III, Para 5: outright sale of land is not subject to GST. However, transfer of Development Rights (TDR/FSI) in a Joint Development Agreement (JDA): the landowner's transfer of development rights to the developer is a supply of service — GST at 18% on the TDR value. The developer pays GST under RCM (Notification 4/2018-IT(Rate), as clarified by CBIC Circular 177/2022). The liability arises on the date of issuance of the completion certificate.

CGST Rate Notification 12/2017-CT(Rate) Entry 77C: maintenance charges collected by a Resident Welfare Association (RWA) from its members are exempt if the monthly charge does not exceed ₹7,500 per member. Above ₹7,500/month: 18% GST on the entire maintenance charge (not just the excess). RWAs with aggregate turnover above ₹20 lakh must register for GST. ITC is available on maintenance-related expenses (civil repairs, lift maintenance) proportionate to taxable activity.

Completed commercial property (OC received): sale of immovable property is a Schedule III supply — not subject to GST (transfer of actionable claims is the applicable legal fiction, and land/completed buildings are exempt). Under-construction commercial property: 12% GST with ITC. Sale of a commercial property by a developer before OC: the buyer pays 12% GST and the developer charges and deposits it. Stamp duty is levied separately by the state — no offset between stamp duty and GST.