GST on under-construction apartments explained

GST on an under-construction flat is a tax on building services provided by developers during construction.

When you buy a home before it is built, the law treats the builder as a service provider. Therefore, GST applies to the property price fixed in your payment schedule.

The GST rate on under-construction flats is 5% for standard homes and 1% for qualifying affordable housing.

• Standard Flats: Taxed at 5% GST without Input Tax Credit (ITC).
• Affordable Flats: Taxed at 1% GST without ITC if the unit meets price and size limits.

GST is charged on a flat whenever you pay the builder before the project gets an official Completion Certificate (CC).

Builders collect this tax in parts alongside your construction installment plan. Once a building gets its completion certificate, new buyers pay zero GST.

GST does not apply to ready-to-move-in flats if you pay the entire cost after the builder gets a Completion Certificate.

• Under-Construction Flat: Subject to 5% or 1% GST.
• Ready Flat (Post-CC): Subject to 0% GST.

Buying a completed home removes the GST expense from your final bill.

GST is calculated by multiplying the base agreement value of your flat by the applicable tax rate.

If an under-construction flat has a base price of ₹1 Crore, the quick tax calculation looks like this:

• Base Flat Price: ₹1,00,00,000
• GST Rate (5%): ₹5,00,000
• Total Payable Amount: ₹1,05,00,000

Yes, GST applies to the initial booking deposit or Expression of Interest (EOI) amount paid for an under-construction flat.

Because booking payments form part of the total flat cost, developers add the applicable GST rate to this initial payment.

GST is collected step-by-step with your construction-linked plan rather than in one huge lump sum.

Your builder sends installment bills at major construction stages, listing base fees and GST separately:

• Booking Stage: GST is applied to the initial booking fee.
• Slab Stage: GST is applied to structural building milestones.
• Possession Stage: GST is applied to final handover dues.

GST applies to monthly society maintenance charges only if your bill exceeds ₹7,500 per month.

• Up to ₹7,500 Monthly: Fully exempt from GST.
• Above ₹7,500 Monthly: Attracts 18% GST on the total maintenance amount.

No, property ads usually show the base rate and exclude GST, stamp duty, and registration charges.

Developers show base rates in marketing ads, so buyers must ask for a full cost sheet to see all extra taxes clearly.

GST applies to building costs, but other government fees follow separate state tax rules during a flat purchase.

• Base Flat Cost: Attracts 5% GST (1% for affordable flats).
• Stamp Duty & Registration: State taxes calculated separately without GST.
• Monthly Maintenance: Attracts 18% GST if over ₹7,500 monthly.

Example: GST on a Luxury Under-Construction Apartment

Calculating tax on a luxury residence helps buyers understand overall acquisition costs early.

Consider a 4 BHK flat at Godrej Epoque in Kokapet, Hyderabad, with a base rate of ₹3.50 Crore:

• Base Flat Value: ₹3,50,00,000
• GST @ 5%: ₹17,50,000
• Subtotal Cost: ₹3,67,50,000

• Location: Kokapet SEZ Main Road, Neopolis, Kokapet, Hyderabad 500075.
• Land & Structure: 5.03 acres, 2 high-rise towers (5B+G+58 floors), and 75% open space.
• Home Sizes: 3 BHK (1,960–2,704 sq ft) and 4 BHK (3,148–3,236 sq ft).
• Starting Price: ₹3.50 Crore onwards.
• Clubhouse: 25,000 sq ft clubhouse with modern leisure facilities.
• Important Dates: Pre-launch on 16 September 2026, Launch on 11 October 2026, Completion on 20 August 2031, and Possession on 05 September 2031.
• RERA Status: Approved — P02400011291

Affordable housing projects enjoy a lower 1% GST rate to keep entry-level homes within reach.

To qualify for this 1% GST rate, the apartment must meet clear limits:

• Metro Cities: Carpet area up to 60 sq. meters and price up to ₹45 lakh.
• Non-Metro Cities: Carpet area up to 90 sq. meters and price up to ₹45 Llakh

GST does not apply separately to the land value of an under-construction apartment project.

Tax rules automatically deduct 1/3rd of the total property value toward land cost. The 5% GST rate applies directly to the final combined property price.

No, individual homebuyers cannot claim back or deduct the GST paid on a residential flat purchase.

The reduced 1% and 5% GST rates are set up without Input Tax Credit for end buyers, making the tax a final purchase cost.

• Check CC Status: Confirm if the project has received a Completion Certificate.
• Verify Builder GSTIN: Check the developer's tax ID number on their official bills.
• Ask for a Cost Sheet: Get a written statement showing base price, GST, and state duties separately.

Common Mistakes Buyers Make

• Looking Only at Advertised Prices: Forgetting that base prices exclude GST and registration fees.
• Paying GST on Ready Flats: Paying tax on ready homes that already have a Completion Certificate.
• Skipping Milestone Reviews: Failing to check tax line items on individual construction bills.

Key Takeaways

• Standard GST Rates: Under-construction flats carry 5% GST, while eligible affordable homes carry 1% GST.
• Ready Flat Exemption: Completed homes with a Completion Certificate are completely free from GST.
• Budget Planning: Buyers looking at luxury projects like Godrej Epoque should add 5% GST to their base property cost when planning payments.