If you’re planning to buy a home or flat in Vasai, Virar, or Naigaon, the Goods and Services Tax (GST) determines the final cost: the sum of the total amount that is to be paid to complete the purchase and call the residential property your home. Many first-time buyers are curious about questions like “What is GST on affordable housing?” or “How much GST will I pay on a 1 BHK in Vasai East?”
In this guide, we’ll break down what GST means for affordable housing, the current rates in 2025, and how it affects property prices in these growing suburbs — all explained with local examples.
Over the past few years, GST on property has been one of the most discussed topics among home buyers and real estate investors alike, for various reasons, yet many first time home buyers just entering the real estate market don’t understand what it is, how it works, and how it is calculated.
With this guide by JSB Homemakers, let us deep dive and understand GST in India and why it matters and if calculated the right way how it can save your money.
What is GST on affordable housing ?
GST is a single indirect tax replacing multiple pre-GST taxes like VAT and service tax. For real estate, GST applies to under-construction properties without an occupancy certificate.
To promote housing for middle-income families, the GST rate for affordable housing is just 1%. Many projects in Vasai East, Virar West, and Naigaon East are designed to meet these criteria so buyers pay less tax.
GST on affordable housing in India refers to the Goods and Services Tax charged on under construction properties as well as possession ready residential properties. As per the GST council, a home is considered as "affordable" if the carpet area does not exceed approximately 645 sq.ft (60 square meters) in metro cities and 960 sq.ft approximately (90 meters) in non metro cities, and the property price is no more than ₹45 lakhs, only then a property can fall under the “affordable housing” segment. Properties falling under this segment enjoy a concessional GST rate of 1% without input tax credit as opposed to non affordable housing which is taxed at 5%.
This lower rate was introduced to promote home ownership among the middle class people and the lower income groups of India, reduce the tax burden for first-time homebuyers, and boost demand in the affordable housing segment. Importantly, GST is applicable only on under construction properties and not on ready to move in or resale properties.
Simply put, builders cannot claim Input Tax Credit (ITC) on the raw materials and services used in construction under these slabs so they absorb the tax benefits within their pricing. This simplifies compliance and reduces overall home cost to the end user i.e., the homebuyer.
Here’s a quick break down: In non-metro cities like Vasai, Virar, and Naigaon:
| Property Type | GST Rate | ITC Allowed? |
|---|---|---|
| Under construction affordable home | 1% | No |
| Under construction, non-affordable home | 5% | No |
| Ready to move in / resale property | 0% | — |
JSB Group has a range of ongoing developments in these areas that qualify for the 1% GST benefit:
These projects by JSB Group, are not just RERA-approved but also future proof, and in locations where rental income and capital appreciation are guaranteed to rise in the coming years ensuring a higher ROI on your investment. For more information Book Your site visit nowReady to Move vs Under Construction Properties:
| Property Type | GST | Example |
|---|---|---|
| Ready to Move Flats | No GST if the builder has the Occupancy Certificate (OC) | JSB Nakshatra Primus, Naigaon East is a ready to move in property, so homebuyers pay 0% GST |
| Under Construction Properties | GST applies 1% for affordable housing | JSB Nakshatra Nirvaan |
How to Calculate GST on Your Flat:
Formula: Flat Price × GST Rate = GST Payable
Most builders and developers in India have a standard framework in place which they follow to work out the GST on a flat. They exclude the value of the land that is about 33% of the agreement value and since land itself isn’t taxed. The remaining 67% is treated as the taxable value. Once that’s determined, they simply apply the applicable GST rate: 1% if the property qualifies as affordable housing, or 5% if it doesn’t.
For example, if you buy a 2 BHK flat in Vasai that is priced at ₹44 lakh, the builder will first deduct 33% as the land component, leaving a taxable value of ₹26.8 lakh, Applying the 1% GST rate for affordable housing the taxable amount becomes ₹26,800. In contrast, if the same flat falls under the non affordable housing segment, the taxable value remains ₹26.8 lakh, but the GST rate jumps to 5%, increasing the tax from ₹26,800 to ₹1.34 lakh.
This simple formula of excluding land value and then applying the correct rate is useful for first time home buyers as it can be used as a way to double check the builder’s calculations and ensure you pay the right price and don’t get fooled.
Why Does GST Matter?
5 Tips By JSB Group To Maximize GST Benefits:
Conclusion:
When it comes to buying a home, GST isn’t just another tax to be paid, it’s a key factor that can add or save lakhs in your budget while making the final purchase. The bottom line is that Gst on affordable housing comes with a 1% GST rate, making it not just cost effective but also financially viable to step into home ownership, turning the dream of buying a house in Mumbai or elsewhere a reality for first time homebuyers. Whereas the non affordable housing segment has a GST of 5% on the taxable value, which can not only make a property expensive but over budget for many. Whereas on the other hand even though ready to move in properties and resale properties are exempt from GST altogether, you’ll still need to account for stamp duty and property registration prices, which can increase the price to be paid considerably.
By clearly understanding when GST applies, when it doesn’t, and how each cost component is calculated, you can not only plan your finances better but also verify builder invoices, and avoid overpaying.
A small amount of research now can mean big savings later. In real estate, the smartest buyer isn’t just the one who finds the right home but it's the one who knows exactly what they’re paying for, down to the last rupee.
If you’re looking for a real estate partner who will remain transparent, guide you through each and every step, and ensure you get the best value for your investment, JSB Homemakers are here to make that happen. From helping you understand GST implications to shortlisting projects that match your budget and lifestyle, our team of dedicated experts is committed to make your home buying journey as smooth and as informed as possible so you can buy a home that feels right, informed, and worth each and every penny that you pay.