Under GST law, sale of land is not treated as a supply of goods or services. Therefore, a buyer purchasing a vacant plot or land through a registered sale deed generally does not have to pay GST.

Why GST Is Not Charged on Plot Purchase

As per Schedule III of the CGST Act, 2017, sale of land is neither a supply of goods nor a supply of services. Because of this, GST does not apply to the sale value of land.

This means that if you are buying a plot, the main costs usually include:

• Sale consideration
• Stamp duty
• Registration charges
• Legal/documentation charges, if any

But GST should not be charged on the land value itself.

What About Developed Plots?

A common doubt is whether GST applies when the plot is part of an approved layout with roads, drainage, electricity lines, water lines or levelling work.

Central Board of Indirect Taxes and Customs (CBIC) has clarified that even if land is sold after basic development work such as levelling, drainage lines, water lines or electricity lines, it is still treated as sale of land and does not attract GST.

However, GST may apply to the development services received by the developer from contractors. That tax is between the developer and the service provider, not directly on the buyer’s land purchase.

For example, if a developer hires a contractor to construct internal roads, drainage systems and water pipelines within a plotted layout, the contractor may charge GST on those services to the developer. However, when the developed plot is later sold to a buyer as land, GST is generally not charged on the plot value itself.

When Should Buyers Be Careful?

Buyers should be careful if the seller separately charges GST under names like:

• Development charges
• Infrastructure charges
• Clubhouse charges
• Maintenance charges
• Common facility charges
• Legal or documentation service charges

The plot value itself may not attract GST, but separately billed services may need individual tax treatment. So, buyers must check the cost sheet carefully before making payment.

GST on Plot Purchase vs Flat Purchase

There is a major difference between buying a plot and buying an under-construction flat.

For a plot purchase, GST is generally not applicable because it is a sale of land.

But for an under-construction flat or villa, GST may apply because construction service is involved.

Once a building is completed and sold after completion certificate or first occupation, GST generally does not apply.

To Conclude

Before purchasing a plot, buyers should verify:

• Whether the property is clearly mentioned as land/plot in the sale deed
• Whether the layout approval is valid
• Whether patta, EC and title documents are clear
• Whether the seller is adding GST wrongly on the land value
• Whether any development or maintenance charges are separately billed
• Whether stamp duty and registration charges are calculated correctly

FAQs

1. Is GST applicable on buying a vacant plot?
No. GST is not applicable on the purchase of a vacant plot because it is a sale of land.

2. Is GST applicable on developed plots?
No. CBIC has clarified that sale of developed land is also treated as sale of land and does not attract GST.

3. Do I have to pay GST during plot registration?
No. During plot registration, buyers usually pay stamp duty and registration charges, not GST.

4. Can a seller charge GST on development charges?
If separate services are billed, GST treatment may differ. Buyers should check the invoice and agreement carefully.

5. Is GST applicable on under-construction flats?
Yes, GST may apply to under-construction flats because construction service is involved.