In India, when a builder or developer undertakes the construction of a property for a customer, *Goods and Services Tax (GST)* applies to the transaction. The GST treatment depends on the nature of the agreement between the builder and the customer.

### *1. GST on Under-Construction Property*
– *For Residential Properties*:
– *Effective GST Rate: **5% (without ITC)* for affordable housing and *12% (without ITC)* for non-affordable housing.
– *Input Tax Credit (ITC) Benefit*: Builders cannot claim ITC on inputs under this scheme.
– *Affordable Housing Criteria*:
– Property value ≤ ₹45 lakhs
– Carpet area ≤ 90 sqm (metro cities) / 60 sqm (non-metro)

– *For Commercial Properties*:
– *GST Rate: **12% (with ITC benefit)*

### *2. GST on Fully Constructed or Ready-to-Move Property*
– *No GST* is charged if the property is sold after receiving the *Completion Certificate (CC)* from authorities.
– Only *stamp duty and registration charges* apply.

### *3. GST on Construction Agreement (Labour + Material)*
If the customer enters into a *construction contract* (where the builder supplies both material and labour), GST is charged as follows:
– *Residential Property Construction: **18% GST* (9% for materials + 9% for services).
– *Commercial Property Construction: **18% GST* (with ITC benefit).

### *Key Points for Builders to Consider:*
– *Input Tax Credit (ITC) Restrictions*: For residential projects under the 5%/12% scheme, builders cannot claim ITC on cement, steel, etc.
– *Time of Supply*: GST liability arises at the earlier of:
– Receipt of payment (advance or instalment)
– Issuance of invoice
– *Compliance: Builders must issue proper **tax invoices* and file *GST returns (GSTR-1, GSTR-3B, etc.)*.

### *Conclusion:*
– *Under-construction property*: 5%/12% GST (residential), 12% (commercial).
– *Fully constructed property*: No GST, only stamp duty.
– *Pure construction contract*: 18% GST.

Would you like clarification on any specific aspect?