GST on real estate has its own scheme — 1% on affordable housing, 5% on other residential, both without input tax credit, and 18% on commercial construction with credit. Ready-to-move-in is outside GST altogether. Here is the post-2019 framework, the 80% inward-supply rule and how JDAs are taxed.
CA Rahul Dang
Founder & Practice Lead
If you are buying a Pune flat, leasing a Baner office, or developing a project on a joint-development agreement, your GST position is governed by a special real-estate scheme introduced on 1 April 2019 through Notification No. 03/2019-Central Tax (Rate). The scheme replaced the earlier higher-rate-with-credit regime with a lower-rate-without-credit regime for residential housing, kept commercial construction at a separate rate, and put completed buildings entirely outside the GST net via Schedule III. Each of these layers has its own consequences for the buyer, the developer and the input tax credit chain. This guide walks through them.
The single most important threshold question. Under Schedule III, Para 5(b) of the CGST Act, the sale of a building (or part thereof) where the completion certificate has been issued by the competent authority before the sale — or where the building has been first occupied before the sale — is neither a supply of goods nor a supply of services. It is outside GST altogether.
In plain terms: a ready-to-move-in flat where the developer has the occupancy certificate (OC) in hand is sold with stamp duty only — no GST. An under-construction flat sold before the OC carries GST. The OC is therefore the single most important document for a Pune buyer comparing two otherwise similar units.
The same Schedule III, Para 5 also keeps sale of land out of GST.
For under-construction residential projects taxable from 1 April 2019, Notification 03/2019-CT (Rate) prescribes:
Both rates apply to the gross transaction value of the apartment after the prescribed deduction of one-third for the value of land (effective rate on the construction component reflects the 1/3 land abatement).
The notification defines an affordable residential apartment as a residential apartment in a project that satisfies, cumulatively:
The Notification lists the metropolitan cities for this purpose (broadly including the Mumbai Metropolitan Region, Delhi NCR, Chennai, Hyderabad, Kolkata and Bengaluru). Pune is treated as a non-metropolitan city for the affordable-housing definition, so the carpet-area threshold is 90 sqm here. A Pune flat satisfying both the 90-sqm carpet-area test and the ₹45-lakh value test attracts the 1% affordable-housing rate.
A unit failing either test attracts the 5% other-residential rate.
Commercial properties (office buildings, malls, hotels, restaurants, etc.) under construction are taxed under Notification No. 11/2017-Central Tax (Rate) as amended. The current effective rate for most works contract services in the commercial real-estate space is 18% (9% CGST + 9% SGST) with input tax credit available — the rate was revised upward from 12% to 18% with effect from 18 July 2022 through Notification No. 03/2022-Central Tax (Rate).
For a Pune commercial unit in a mixed-use project, the developer charges 18% with credit; for the buyer, GST is an inflow cost that the building owner can typically recover when the building is leased out (where the lease is itself a taxable supply at 18%).
A non-obvious but consequential rule for residential projects under the 1%/5% scheme: at least 80% of inward supplies of goods and services (other than the specified exclusions) used in a project must be procured from GST-registered suppliers. Any shortfall below 80% is liable to GST under reverse charge in the hands of the developer at 18% (with cement attracting 28% RCM if procured from an unregistered supplier).
The specified exclusions from the 80% computation are: TDR, JDA, FSI, long-term lease premium, and certain electricity charges. Capital goods, finance and salaries are also outside the 80% denominator.
For Pune developers running multiple projects, this rule has changed sourcing patterns — most plywood, paint, fittings and labour-contract work is now procured from registered vendors as a matter of routine.
In Pune's redevelopment-heavy market, JDAs are common: the landowner contributes the land, the developer constructs, and the developed area is shared. The GST treatment under Notification No. 04/2019-Central Tax (Rate) is layered:
This is one of the few areas in real estate where a small change in the sale velocity at completion can shift the GST burden materially. Developers structuring JDAs in Pune typically build the GST-on-TDR sensitivity into the project cash flow before signing.
For a buyer who is a registered business intending to use a property for business, Section 17(5) CGST Act blocks credit on:
The Supreme Court's decision in Safari Retreats (2024) on the scope of "plant" within Section 17(5)(d) is the leading case here; the legislative response has further refined the position. For a buyer occupying their own office, the practical assumption remains that GST on construction is a sunk cost — credit is blocked. The exception around plant and machinery, and around buildings let out for taxable supplies, requires a careful project-specific reading.
For Pune's IT-park leases, this 18% commercial rent is recovered through input credit by the IT-tenant. For residential rent to a Pune professional registered for GST (e.g. a freelance consultant who has crossed the threshold), the position changed sharply on 18 July 2022 — the tenant must self-account for GST under RCM.
A Pune residential developer running a project under the 1%/5% scheme reports monthly in GSTR-1 and GSTR-3B, pays GST without ITC at the prescribed rate, reverse-charges 18% (28% on cement) on any inward-supply shortfall below 80%, and computes the TDR liability at project completion. The annual reconciliation in GSTR-9 ties the project to financial accounts and the books used for income-tax F&O turnover-style reconciliation does not apply here — this is a distinct exercise grounded in project ledger arithmetic.
For a complete reading of GST registration and threshold mechanics, see our GST Registration Guide 2026. For MahaRERA aspects of the same project, see our MahaRERA buyer's checklist.
At RDA Tax Advisory Services, Baner, real-estate GST is one of the more frequent enquiry topics from Pune buyers and developers. For homebuyers, we confirm whether the flat falls in the affordable-housing or other-residential rate (the carpet area and price test), whether the OC is on record (Schedule III treatment), and whether the developer's GST invoicing matches the scheme. For developers, we model the 80%-inward-supply position, structure TDR liability across the sale curve, and file the periodic returns. For commercial buyers and lessors, we map the 18%-with-ITC route so the credit chain is not lost at registration. Office No. 102, Snehraj Apartment, Baner, Pune 411045 · call +91 77570 45059.
Pune real-estate transaction with a GST question? Whether you are buying a flat, leasing an office, or developing under a JDA, we work the GST scheme back from the deal and protect your credit and your cash. Book a real-estate GST consultation at rdatax.in or call +91 77570 45059 — RDA Tax Advisory Services, Baner, Pune.
Verification note: Material legal positions in this article — the post-2019 residential-housing GST scheme of 1% / 5% without ITC under Notification 03/2019-CT (Rate); the affordable-housing definition (carpet area 60 sqm metro / 90 sqm non-metro, value ≤ ₹45 lakh); the 18% rate on commercial works-contract services under Notification 11/2017-CT (Rate) as amended by Notification 03/2022-CT (Rate); the Schedule III, Para 5(b) exclusion of completed buildings from GST; the 80% inward-supply-from-registered-vendors rule and the RCM on shortfall; the JDA / TDR treatment under Notification 04/2019-CT (Rate) read with Notification 05/2019-CT (Rate); the Section 17(5) blocked-credit position on construction of immovable property for own use; and the residential-rent RCM amendment under Notification 05/2022-CT (Rate) effective 18 July 2022 — are sourced from the CBIC notifications and the CGST Act, 2017 as accessible on cbic-gst.gov.in and taxinformation.cbic.gov.in. Confirm specific deal structures with your CA.
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