GST on Under-Construction Property and Real Estate in Tamil Nadu

GST is payable only on under-construction property — once a completion certificate is issued, the sale of a completed unit is treated as a sale of immovable property, which falls outside GST entirely (though stamp duty and registration charges still apply). This single distinction is the source of most confusion: a buyer booking a flat that is 90% complete but not yet CC-issued still pays GST, while their neighbour buying an identical, fully-completed unit next door does not.

For residential property, the standard GST rate is 5% without input tax credit for non-affordable housing, and 1% without input tax credit for affordable housing (as defined by carpet area and value thresholds). The "without ITC" structure means the builder cannot pass on credit for GST paid on construction materials and services, which is meant to be factored into the base price — buyers should confirm the quoted price already reflects this and isn't being inflated to recover the builder's lost credit separately.

Commercial real estate under construction is taxed at 12% with input tax credit available to the developer, a materially different structure that affects project pricing and, indirectly, resale value. Mixed-use developments and joint development agreements between landowners and builders add a further layer of GST complexity around the landowner's share of constructed units, which is a frequent source of dispute.

Buyers and developers alike should have the applicable GST rate and its basis confirmed in writing before booking or structuring a project, since disputes over GST treatment often surface only at possession, when they are far harder to resolve. Our Civil & Property Law and GST & Tax practices jointly advise on real estate transactions across Chennai and Tamil Nadu.