How GST is charged on Apartments under construction

If you are buying an under construction Apartment, it is considered as availing service from the real estate builder; hence, you are supposed to pay GST on it. According to the GST law, construction of an apartment, building, complex or a part of it, intended for sale to a home buyer, attracts GST on the sale of the price. However, the tax should not be charged if the apartment is being bought after the issuance of completion certificate by a government authority or after the apartment has undergone occupation, which means it is a case of resale.

An under construction apartment attracts GST at a rate of 5%. But it is charged on the entire value of the property; As per the new guidelines from the GST panel the GST on Under Construction Apartment is reduced from 18% to 5 % which doesn’t have Input credit for the Real Estate Builder. So the calculation is simple, just add GST to the full cost of the apartment.

Also, real estate services which do not include the transfer of land rights attract GST on the entire amount. According to CBEC, “consideration which doesn’t constitute a transfer in land or undivided share of land as part of the consideration, such as construction services provided by a sub-contractor to the builder, attract GST at the standard rate of 5%

Developer or service providers are expected to charge 5% of GST to the home buyers, which will eventually help to calculate the value of the apartment easily.

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