GST on Real Estate in Maharashtra: Everything You Need to Know

According to a report by Knight Frank India and Naredco, the Indian real estate market is expected to reach $1.04 trillion by 2029. A major factor influencing this market is the Goods and Services Tax (GST).Whether you are a homebuyer, investor, or real estate developer , understanding GST on real estate in Maharashtra is crucial for making informed financial decisions.

The GST on real estate transactions has simplified taxation, eliminating multiple indirect taxes such as VAT, service tax, and excise duty. However, its impact varies depending on property type, status (under construction or ready-to-move-in), and price range. In this guide, we’ll break down everything you need to know about GST on property purchases in Maharashtra, including tax rates, exemptions, and smart ways to optimize costs.

Understanding GST on Real Estate in Maharashtra

The GST on real estate in Maharashtra applies to both under-construction properties and commercial real estate but does not affect ready-to-move-in properties with a completion certificate issued by the relevant authority. Maharashtra, being one of India’s largest real estate hubs, witnesses a significant number of real estate transactions, making it crucial to grasp how GST influences property prices.

Under the GST regime, the taxation structure is streamlined, replacing multiple indirect taxes such as VAT, service tax, and excise duty. Buyers now need to pay GST based on the type of property they invest in.

GST Rates on Various Types of Real Estate in Maharashtra

1. GST on Residential Property Purchase

The GST rates for different residential properties vary based on their classification:

• Affordable housing (properties valued below ₹45 lakhs and covering up to 60 sqm in metro cities or 90 sqm in non-metro areas): 1% GST (without input tax credit - ITC).
• Non-affordable housing (properties priced above₹45 lakhs): 5% GST (without ITC).

2. GST on Under-Construction Property

A buyer purchasing an under-construction property must pay GST at 5% for regular housing and 1% for affordable housing, provided the project falls under the GST framework.

3. GST on Flat Purchase Above 50 Lakhs

For luxury homes costing above ₹50 lakhs, the GST remains 5% without input tax credit (ITC), but additional charges such as stamp duty and registration charges also apply, increasing the overall property cost.

4. GST on Commercial Real Estate

• Shops, office spaces, and commercial units attract an 18% GST rate if sold before completion.
• If the property has received a completion certificate, no GST is applicable on its sale.

How to Calculate GST on Real Estate in Maharashtra?

Understanding how to calculate GST on flat purchase can help buyers estimate the final cost of their property. Here’s an example:

Example Calculation: If you purchase an under-construction residential propertyworth ₹60 lakhs, GST will be charged as follows:

• GST at 5% = ₹60,00,000 × 5% = ₹3,00,000
• Stamp duty and registration charges (typically 6% in Maharashtra) = ₹60,00,000 × 6% = ₹3,60,000

Total Cost = ₹60,00,000 + ₹3,00,000 + ₹3,60,000 = ₹66,60,000

GST Exemptions and Benefits for Homebuyers

Maharashtra offers various exemptions under GST for specific categories of buyers:

• No GST on ready-to-move-in properties with a valid completion certificate.
• Exemption for homebuyers in affordable housing under PMAY (Pradhan Mantri Awas Yojana).
• No GST on resale properties, reducing the tax burden for secondary market buyers.

GST on Home Loan and Property Registration in Maharashtra

While GST directly applies to property purchases, many homebuyers also take loans to finance their homes. It’s essential to understand how GST impacts home loan processing fees and property registration charges in Maharashtra:

• GST on Home Loan Processing Fees: Financial institutions charge an 18% GST on loan processing fees, legal charges, and other administrative costs. For instance, if the loan processing fee is ₹10,000, the GST would be ₹1,800, making the total cost ₹11,800.
• Stamp Duty and Registration Fees: While GST is not applicable on property registration, stamp duty (5-6% in Maharashtra) and registration charges (1%) still apply. These charges significantly add to the final property cost, making it crucial for buyers to factor them in while budgeting.

Tip: Check for home loan offers with waived processing fees or cashback benefits to offset the GST impact.

How to Avoid GST on Flat Purchase?

There are a few legal ways to minimize or avoid GST on real estate transactions:

1. Buy a Ready-to-Move-In Property – Properties with a completion certificate are exempt from GST
2. Look for Resale Properties – Buying a resale home does not attract GST.
3. Negotiate with Developers – Some builders may absorb the GST to make sales more attractive.
4. Consider Affordable Housing – If your property is priced below ₹45 lakhs, GST is only 1%

The Impact of GST on Real Estate in Maharashtra

Theimpact of GST on real estate has been mixed:

• Positive Aspects:
• Eliminated multiple indirect taxes, simplifying property taxation.
• Increased transparency in real estate transactions, benefiting buyers.
• Encouraged investment in construction properties, boosting the housing sector.
• Challenges:
• Lack of input tax credit (ITC) increases the cost burden on developers.
• Higher tax rates on commercial properties, affecting business investments.

Future of GST in Maharashtra’s Real Estate Market

With ongoing discussions about GST 2025: Impact of Goods and Services Tax on real estate, experts predict further rationalization of tax rates. There is speculation that input tax credit might be reintroduced to reduce costs for builders, potentially lowering property prices.

Additionally,Maharashtra’s housing policy is likely to promote affordable housing, leading to further benefits for homebuyers.

Why Invest in Plots Instead of Apartments?

Given the complexities of GST on property purchases, many investors are turning to land investments as a strategic alternative. Buying plots eliminates the GST component, offering cost-effective real estate investment opportunities.

How Karamchand Properties Can Help You Find the Best Investment?

Navigating GST on real estate in Maharashtra can be complex, but choosing the right developer can simplify the process and reduce costs. At Karamchand Properties, we offer legally verified plots with transparent pricing, so you don’t have to worry about hidden charges.

Why Choose Karamchand Properties?

• Prime Locations – Strategically located plots with excellent connectivity. 
• Transparent Transactions – No hidden charges, full legal compliance. 
• Investment-Friendly Options – High appreciation potential with minimal taxes. 
• Customized Solutions – Residential, commercial, and industrial plots to suit all needs.

Don’t let GST affect your investment plans. Explore premium plotted developments with Karamchand Properties today! Visitour plotted projects and secure a future-proof investment.