Latest GST Reform 2025: Impact on Property Registration Costs & Homebuyers

Understanding GST and Property Registration Costs

When you buy a property, you need to pay different taxes and charges. One of the most important taxes is the Goods and Services Tax (GST). The government has introduced several GST reforms over time, and the latest changes have a direct impact on property registration costs.

This blog will explain in simple words how the new GST reforms affect property buyers and what it means for registration costs.

What is GST on Property Transactions?

GST applies to under-construction properties, but not on ready-to-move-in homes. The tax rate depends on the type of property and its price.

Old GST Rates on Property

• Affordable housing – 8% (with ITC – Input Tax Credit)
• Non-affordable housing – 12% (with ITC)
• Commercial properties – 12% or 18%, based on the type of property

Latest GST Reforms on Property

The government revised GST rates to simplify taxation and reduce the financial burden on homebuyers:

• Affordable housing – 1% (without ITC)
• Non-affordable housing – 5% (without ITC)
• Commercial properties – No major changes (still 12% or 18%)

How the Latest GST Reform Affects Property Registration Costs?

1. Lower GST on Affordable Homes Means Lower Costs

If you are buying an affordable home, your GST is now just 1% instead of the earlier 8%. This means lower tax payments and reduced property registration costs.

2. No Input Tax Credit (ITC) – Higher Overall Cost for Some Buyers

Earlier, developers could claim Input Tax Credit (ITC) and pass on some benefits to buyers. The new GST reform removed ITC, which means developers may increase the base price of properties. This could impact registration costs in some cases.

3. No GST on Ready-to-Move Homes – No Effect on Registration Cost

If you buy a completed home (with an occupancy certificate), there is no GST at all. However, you still need to pay stamp duty and registration charges separately.

4. Impact on Commercial Properties

For commercial properties, the GST rate remains at 12% or 18%, depending on the type of property. The latest reforms have not reduced this tax, so registration costs remain high.

5. Impact on Under-Construction Properties

Many buyers prefer under-construction properties because they are slightly cheaper than ready-to-move-in homes. However, these properties attract GST at 1% (affordable) or 5% (non-affordable). This means that even though the tax rate is lower than before, buyers still need to factor in GST while calculating total property costs.

6. Impact on Luxury Properties

Luxury properties do not fall under the affordable housing category, so they attract a higher GST of 5%. However, the removal of ITC means developers cannot claim tax benefits, which may result in higher base prices for luxury homes.

7. Indirect Impact on Resale Property Market

Since GST is applicable only on new and under-construction properties, many buyers may shift towards resale properties to avoid additional tax. This could increase the demand for resale homes, indirectly impacting property values.

8. Effect on Home Loan Eligibility

With lower GST on affordable housing, buyers may find it easier to take a home loan since the total cost of property ownership is reduced. This can improve home loan eligibility and affordability.

Stamp Duty and Registration Charges – No Change in State Taxes

While GST is a central tax, stamp duty and registration charges are state-specific taxes. These charges remain the same even after the GST reform. The rates vary from state to state, usually between 5% to 8% of the property value.

Some states offer stamp duty discounts for:

• Women buyers
• First-time homebuyers
• Affordable housing projects

If you are purchasing a property, check your state government website for the latest stamp duty and registration fees.

Who Benefits from the Latest GST Reform?

Things to Consider Before Buying a Property

• Check if the property is under construction or ready-to-move-in
• Understand GST, stamp duty, and registration costs before finalizing
• Verify if any state government discounts apply to you
• Ask developers about price adjustments due to ITC removal
• Compare ready-to-move-in and under-construction prices carefully
• Consult a real estate expert before making a purchase decision
• Look for builders offering price reductions or extra benefits

Q&A on GST Reform and Property Registration

Q1: Does GST apply to resale properties?

A: No, GST is applicable only to new and under-construction properties. Resale properties do not attract GST.

Q2: Is stamp duty included in GST?

A: No, stamp duty is a separate state government tax and is not included in GST.

Q3: Can builders increase prices after GST reform?

A: Yes, due to the removal of ITC, some builders may increase the base price of properties.

Q4: Do NRIs have to pay GST when buying property?

A: Yes, NRIs need to pay GST on under-construction properties but not on ready-to-move-in homes.

Q5: How do I calculate my total property cost with GST?

A: Add GST (if applicable) to the property price and include stamp duty & registration charges for the final cost.

Final Thoughts – Is Property Registration Cost Higher or Lower?

The latest GST reform reduced GST rates on homes but removed ITC benefits. This means that while GST rates are lower, some developers might increase base prices. However, overall, affordable housing buyers benefit the most from lower GST.

For ready-to-move-in properties, there is no GST impact, and stamp duty and registration charges remain the same. If you are planning to invest, make sure to calculate total property costs, including stamp duty, registration, and GST, before making a decision.

Buying a property is a long-term investment, and understanding the tax structure can help you save money. For more real estate insights, visit MaadiVeedu.com and check our latest updates at blog.maadiveedu.com!