GST on under-construction flats in India: 5% and 1% rates, affordable housing test and what is taxed
When GST applies to a flat purchase, how the 5% and 1% effective rates work, the affordable housing carpet area and ₹45 lakh tests, and GST on parking, PLC and maintenance.
GST applies to a flat in India only when you buy it from a builder before the completion or occupancy certificate is issued. The effective rate on residential units is 5% of the agreement value without input tax credit, or 1% for affordable housing. A flat counts as affordable if its carpet area is up to 60 square metres in metropolitan cities or 90 square metres elsewhere, and its value is up to ₹45 lakh. Resale flats and completed flats carry no GST on the price. These rates have applied since 1 April 2019 and were left unchanged in the GST rate revision effective 22 September 2025.
The 1% and 5% figures are effective rates on the total value. The notifications reach them by deeming one-third of the amount to be the value of land, which is not taxed.
When GST applies and when it does not
| Situation | GST on the price? | Why |
|---|---|---|
| Booking an under-construction flat from the builder | Yes, 5% or 1% | Supply of construction service before completion |
| Instalments paid after the completion certificate is issued | Generally no, for amounts relating to the period after completion | Sale of completed property is outside GST |
| Ready-to-move flat with completion or occupancy certificate | No | Sale of immovable property after completion is not a supply of goods or services |
| Resale flat from an individual owner | No | The owner is not supplying a service in business |
| Buying a plot of land | No GST on land | Land is outside GST; development charges may be taxed separately |
| Commercial units in a project | Higher rate, input tax credit rules differ | Not covered by the residential concession |
The deciding document is the completion certificate, issued by the competent authority (the municipal corporation or development authority), or the first occupation of the project, whichever is earlier. Ask the builder for a copy before you accept a "no GST" price on a supposedly ready flat.
Is my flat affordable housing?
The 1% rate needs both tests to be met:
- Carpet area: up to 60 square metres in the metro cities named in the notification (Bengaluru, Chennai, Delhi NCR limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram and Faridabad, Hyderabad, Kolkata and the Mumbai Metropolitan Region), or up to 90 square metres elsewhere.
- Value: gross amount up to ₹45 lakh.
A 58 square metre flat in Pune at ₹44 lakh qualifies at 1%. The same flat at ₹46 lakh pays 5%. A 70 square metre flat in Thane at ₹40 lakh pays 5%, because Thane is in the Mumbai Metropolitan Region and the flat is over 60 square metres. Carpet area here means the RERA definition: the net usable floor area, excluding external walls, balconies and service areas.
Worked example
Illustrative under-construction flat in Hyderabad, agreement value ₹90,00,000, not affordable housing:
- GST at 5% effective: ₹90,00,000 × 5% = ₹4,50,000, charged with each instalment as it falls due
- Stamp duty and registration on the sale document, at the state rate: an illustrative 7.5% = ₹6,75,000
- Government levies combined: ₹11,25,000, or 12.5% of the agreement value
A comparable ready flat at the same price would carry no GST, so the buyer saves ₹4.5 lakh. That is a big reason ready inventory and under-construction prices are not directly comparable. The new launch versus resale comparison works this through in full.
What else in the builder's bill carries GST
Builders split the price into many lines. GST treatment depends on whether a charge is part of the construction supply or a separate service:
- Preferential location charges (PLC), floor rise and covered parking charged as part of the unit price are generally part of the same supply and taxed at the same rate as the flat.
- Club membership, maintenance in advance and other separate services may be taxed at 18% as separate supplies. Ask for the invoice break-up.
- Maintenance paid to a residents' welfare association is exempt up to ₹7,500 per month per member. If the charge is higher and the association's turnover crosses ₹20 lakh, 18% GST applies to the whole amount.
- Legal charges, documentation and corpus fund collected by the builder: check the invoice. A deposit held for the society should not attract GST if it is genuinely a deposit, but practice varies.
Things to check before paying
- The agreement shows GST separately. A price "including GST" can hide the rate actually charged.
- The builder's GSTIN and the invoices. Each demand should come with a tax invoice. Keep every one.
- The RERA registration. The RERA complaint guide explains how the project's registration protects your instalments.
- The completion date. If the completion certificate arrives before your last instalments, ask how GST will be treated on payments after that date.
- Anti-profiteering. When rates on housing were cut in 2019, builders were expected to pass the benefit on to buyers. The forum for anti-profiteering complaints has changed more than once since then, so check the current route on the CBIC portal. Either way, keep a written record of the price you were quoted and the date.
FAQ
Can I claim input tax credit on the GST I pay for my flat?
No. Individual home buyers cannot claim input tax credit. For the builder, the 5% and 1% rates come without input tax credit, so construction costs are already in the price.
Is GST charged on the stamp duty?
No. GST is charged on the builder's consideration. Stamp duty is a separate state levy on the document and is not part of the GST base.
I booked before April 2019. Which rate applies?
For projects that were ongoing on 1 April 2019, builders had a one-time option to stay on the old rates with input tax credit or move to the new ones. Ask the builder which option was chosen for your project.
Does GST apply to resale of an under-construction flat?
If you buy someone's booking in an under-construction project, the instalments the builder still has to receive carry GST as usual. The premium paid to the original allottee is a transfer of rights, not a construction supply. Its tax treatment can be complex, so take advice.
Sources
- CBIC GST portal — notifications on construction services and rates
- GST Council — decisions of the GST Council, including the 2019 real estate rates and the 2025 revision
- GST portal — search a builder's GSTIN
- Ministry of Housing and Urban Affairs — RERA definition of carpet area
- See also the overview of buying and selling costs and the state stamp duty guide
