17 Jan 2019Posted By: Mudit Handa

How can GST Input Credit be claimed in Real estate sector?

Real estate is indeed one of the most substantial and profitable sectors of our economy. This is the undeniably a lucrative market as it involves rapid growth in the terms of revenue generation.

It can’t be negated that the Goods and Service Tax regime has increased ease of doing business, just as accounting and legal compliances have now become more prompt and hassle-free.

Yet the investors, as well as dealers of the realty market, are encountering certain difficulties and confusions due to complicated GST framework in the real estate sector.

The complexities faced by the realtors having GST registration in respect of GST on real estate have been duly considered by the tax authorities. Moreover, the GST council is working on its idea to bring real estate under GST Composition Scheme.

One of the trickiest issues in GST is of Credit Availment and Reversals in Real estate sector. The calculation of the input credit and its reversal is a very confusing task. The detailed concept and procedure of GST input credit in real estate will be discussed here.

Till date, CBIC has clarified and revised several provisions with respect to Output GST Rates, Input Tax Credit (ITC) and the Effective Tax Rate on Building Construction. In order to understand the process of credit availment in Real estate, we need to discuss the complete system of Input Tax Credit under Real estate sector.


#1. What is the system of Input Credit under Real estate sector?

The system of credit availability of GST on real estate is classified into 3 segments:–

  1. Credit availment
  2. Credit blockage
  3. Credit reversal.

These segments have been discussed below in detail.


#2. What is meant by Credit Availment under GST?

As per the Section 16(1) of the CGST Act-2017, any dealer having GST registration is allowed to avail input tax credit of GST paid on inputs, in the course of furtherance of business.

Hence, a real-estate developer having GST registration is entitled to claim input credit of all inputs procured by him that were used in the course or furtherance of his business.


#3. How is Credit blockage applicable in real-estate?

The list of blocked input credits is given u/s 17(5) of the CGST Act-2017. Out of them, blocked credits relevant for the real-estate developer are given u/s 17(5)(c) & 17(5)(d).

  • As per section 17(5)(c), if the recipient receives works contract services, he will not be is eligible to claim input of GST on works contract services unless he himself is the provider of works contract services.
  • Now, the question arises: "Whether the developer is eligible to claim input of GST levied by his sub-contractor against works contract services?" The answer is, a contractor undertaking a works contract can get input credit of GST charged by another contractor.
  • However, section 17(5)(d) restricts a developer having GST registration from claiming GST input in case of construction of immovable property. Even if such inputs procured for construction have been used for the furtherance of his business, the input credit won’t be available to him.

Refer to the  for more details.



#4. What is meant by Credit Reversal under GST?

  • Section 17(2) read with Section 17(3) of the CGST Act-2017, state that the input credit used for the sale of land or building after receiving the completion certificate shall be reversed.
  • The procedure for credit reversal is given under Rule 42 which applies in cases where the exempt & taxable supplies are provided together. A developer in such case has to apportion the credit in the ratio of exempt: taxable supplies.

The rules regarding input credit in the case of Real estate sector as explained above will definitely help the buyers as well as Real estate developers having GST registration.


If you need any sort of help on GST registration, feel free to contact our business advisor at 8881-069-069.

Now you can also Download E-Startup Mobile App and Never miss the latest updates relating to your business.

Give a Reply

Fill up the form

E-startupIndia Mobile App


Download our free Android App and get realtime update on your order status.
Easily connect with our professionals handling your order over chat & mobile.
Never miss business compliances due date with advance notifications.

Get E-startupIndia in your mobile

Why Choose Us

e-startupindia member of GOOGLE

Serving business owners with an Average 4.8+ Google Rating.

e-startupindia certified #AxixBank

Trusted by Axis bank to cater its clients all licensing & compliance needs.

e-startupindia NG Alliance Partner

Providing lending solutions for business needs with NeoGrowth.

e-startupindia Google Partner

Open Neo bank account worldwide & provides cross-border remittance solutions.

e-startupindia member of CII

E-startupindia is a Proudly Member of Confederation of Indian Industry.The CII is a premier business association in India which works to create an environment.

e-startupindia certified #Etstartupindia

E-Startup India is duly certified under GOI's Startup India scheme and is renowned for our tech-driven solutions for business & legal services requirements for MSMEs.

e-startupindia Google Partner

E-Startup India is a Google Partner, which implies we are rigorously involved in assisting SME businesses to market their presence in the digital world.

Popular Services

Private Limited Company | Public Limited Company | One Person Company | Limited Liability Partnership | Partnership Firm | Sole Proprietorship Firm | Section 8 Company Registration | USA Company Registration | UK Company Registration | UAE Company Registration | Singapore Company Registration | Company Registration Hong Kong | Import Export Code | IEC Modification | AD Code Registration | Spice Board Registration | US FDA Certification | ISO 9001 2015 | ISO 14001 EMS | ISO 22000 FSMS | ISO 27001 ISMS | ISO 50001 Energy Management | ISO 45001 | ISO Surveillance | ISO Certification | MSME Registration | FSSAI Registration | Shop Establishment Registration | Barcode Registration | Coffee Board Registration | Startup India Certificate | ZED Certification | Trademark | Trademark Objection Reply | Trademark Opposition | Trademark Hearing | Trademark Formality Check Fail | Website Development | Patent | Copyright | Design Registration | Business Name Suggestion | Logo Designing | Trademark Assignment Service | GST Registration | GST Modification | GST Cancellation | GST Return Filing | GST Invoice Software | UIN Registration | Income Tax Return | Income Tax Notice | Income Tax Refund | Income Tax Assessment | TDS Return Filing | Form 15CA / CB | Professional Tax Registration | 12A and 80G Registration | FCRA Registration | CSR Registration | Project Report | Pitch Deck | Seed Fund Startup India | Accounting for Ecommerce | Virtual cfo services in india | Bookkeeping & Accounting | Private limited Company Annual Compliance | Form INC-22A | Form 15CA / CB | Company Strike Off | Commencement of Business | Fssai annual return | Online CA Consultancy | Income Tax Return Filling | LLP Annual Compliances | Form DIR-3 KYC | Virtual Office for Company Registration |


  • e-startupindia South Asia's Leading Multimedia News Agency
  • Business Standard
  • e-startupindia Outlook
  • e-startupindia Htmedia
  • e-startupindia Yahoo News
  • e-startupindia New Delhi Times
  • e-startupindia India.com
  • e-startupindia IBTN9