Real estate prices across India continue to rise, making it increasingly difficult for ordinary buyers to purchase a home. But do you know how much of the amount you spend on a property actually goes toward taxes and other hidden costs? In many cities, these invisible expenses are a significant factor in driving up property prices. Experts estimate that about 25% to 40% of the total cost of buying a house goes toward such charges.
This includes GST on construction materials, project approvals, and other regulatory fees. For instance, if you spend Rs 1 crore on a home, roughly Rs 25 lakh to Rs 40 lakh of that goes to the government or related authorities, long before you even see the property.
In cities like Gurugram, Bengaluru, and Mumbai, while property prices are sky-high, the basic infrastructure—roads, drainage, sewage—often remains inadequate. Builders must pay fees to the town planning authority even before laying a single brick, which adds 5–7% of the project cost in Gurugram, and 4–6% in Bengaluru and Mumbai.
On top of that, development charges like IDC (Infrastructure Development Charges) or EDC (External Development Charges) can add up to 2% of the project cost in some areas. These hidden costs significantly inflate the overall price buyers end up paying. Construction materials like cement attract 28% GST, which goes directly to the government. Additionally, 1% labour cess must be paid. Combined, these invisible costs add up to roughly 15–20% of the project cost.
On top of this, there are visible charges that buyers must cover. GST on under-construction properties is around 5%, which the buyer pays. Then there are stamp duty and registration charges, varying by state, typically 5–7%. Combined, these charges push the total costs beyond 30%. Moreover, annual property taxes are also mandatory. Overall, experts estimate that 30–40% of the total price of a home goes toward taxes and other statutory levies, significantly increasing the effective cost to buyers.