Two buyers in Bengaluru compared notes over coffee last month. One had bought an under construction flat in Sarjapur and paid GST on top of the price. The other had bought a ready flat in the next tower, already handed over with its occupancy certificate, and paid no GST at all. Same builder, same locality, similar price, and yet a five percent difference in tax purely because of when in the construction cycle they bought. That single distinction, under construction versus completed with an occupancy certificate, is one of the most consequential and least understood tax points a Bengaluru buyer faces.

The short answer. GST applies to under construction residential flats at five percent for standard homes and one percent for qualifying affordable housing, in both cases without input tax credit. A ready to move flat that already has its occupancy certificate is outside GST, so you pay none. The trade off buyers weigh is real: an under construction flat may cost less up front but carries GST, while a completed flat carries no GST but usually a higher sticker price. Knowing which applies lets you compare two homes on equal terms.

How much GST applies to an under construction flat?

For residential property still under construction, the current scheme charges five percent GST on standard, non affordable homes and one percent on flats that qualify as affordable housing, and in both cases the builder cannot pass on input tax credit to reduce your bill. This structure has been in place since the regime that took effect in April 2019, and the wider set of rate changes in late 2025 left the property scheme unchanged, so these rates continue to apply.

The practical implication is that GST is a real line item on an under construction purchase, calculated on the value of the flat, and you should build it into your budget from the start rather than treating it as a surprise at booking. Because there is no input tax credit, the rate you see is the rate you pay, with no offset flowing back to you.

It is worth understanding what removing input tax credit means in plain terms. Input tax credit is the mechanism that lets a business offset the GST it paid on its own inputs against the GST it collects. When that is switched off for the buyer facing rate, the builder absorbs those input taxes into the base cost, and you simply pay the headline percentage on the flat. So the five percent or one percent is genuinely all you are billed under GST, but do not expect any reduction beyond it.

Why do ready to move flats attract no GST?

This is the point that saves or costs buyers the most. GST is a tax on the supply of under construction property. Once a building has received its occupancy certificate and the flat is sold as a completed, ready to move home, that sale is treated as outside GST, so no GST is charged. In other words, the occupancy certificate is not only a legal and civic milestone, it is also the line that separates a taxable under construction sale from a GST free completed one.

This is one more reason the occupancy certificate deserves your attention, a theme we explore in our guide on the difference between an occupancy and a completion certificate. For a buyer choosing between a nearly finished under construction unit and a completed one, the GST difference can be large enough to change the maths.

There is a timing subtlety worth noting. What matters is the status at the time of sale. A flat you book while it is still under construction is an under construction supply for GST, even if the building is completed by the time you take possession. If avoiding GST is important to your budget, the cleaner path is to buy a unit that is already completed and carries its occupancy certificate at the point you purchase.

What counts as affordable housing for the lower rate?

The one percent rate is not something you can simply claim; a flat has to meet the defined conditions to qualify as affordable housing. Broadly, the unit must fall within a value ceiling and a carpet area ceiling, and the area ceiling is smaller in metro cities than in non metro ones. Bengaluru is treated as a metropolitan area for this purpose, so the applicable carpet area limit here is the tighter metro figure.

Because these thresholds decide whether you pay one percent or five percent, do not take a builder's affordable label at face value. Ask specifically how the flat qualifies, on both value and carpet area, and confirm it against the definition. The table below lays out how GST typically applies across the common property situations a Bengaluru buyer meets.

Is GST separate from stamp duty and registration?

Yes, and this trips up many first time buyers. GST is a central tax on the supply of under construction property, while stamp duty and registration charges are state levies you pay to register the sale deed regardless of whether the flat is under construction or ready. They are different taxes collected by different authorities, and you can face both on an under construction purchase. Budget for them separately rather than assuming one covers the other.

On a ready flat with an occupancy certificate you would typically pay stamp duty and registration but no GST, whereas on an under construction flat you may pay GST plus stamp duty and registration. Mapping out every applicable charge before you commit is the only way to compare two homes accurately.

How does GST change the maths between under construction and ready?

Treat GST as part of the true cost, not a footnote. An under construction flat advertised at a lower price can end up close to, or even above, a completed flat once you add five percent GST and account for the wait and the construction risk. A completed flat priced a little higher may be the better value once its zero GST position and immediate possession are factored in. Neither is automatically better; the point is to compare like with like.

This is buyer maths, not investment advice. Run the total outflow for each option, including GST where it applies, stamp duty, registration and your loan costs, and let the full picture guide you. If you are still testing affordability, our guide on home loan tax benefits helps you see how the financing side fits alongside these one time charges.

What should I confirm with the builder about GST?

Before booking an under construction flat, get the GST position in writing. Ask which rate applies to your unit and why, whether the builder is treating it as affordable or standard, and how the GST is shown on the payment schedule and invoices. For a project such as Sobha Liora in Whitefield, or any under construction development, the tax applicable to your specific unit should be stated clearly, not left vague.

Keep every GST invoice with your purchase file. Clear tax documentation supports your ownership record and avoids confusion later, and it lets you confirm that what you were charged matches what the scheme actually requires for your specific type of flat. If a figure looks wrong, raise it with the builder before you pay rather than after.

A seven step GST checklist for Bengaluru buyers

Work through these before you book an under construction flat.

1. Confirm whether the flat is under construction or a completed unit with an occupancy certificate.
2. If under construction, ask the builder which GST rate applies and why.
3. Check whether the flat genuinely qualifies as affordable on both value and carpet area.
4. Remember that no input tax credit flows to you, so the stated rate is the rate you pay.
5. Confirm that a ready flat with an occupancy certificate carries no GST.
6. Budget stamp duty and registration separately from GST, as they are different taxes.
7. Collect and keep every GST invoice together with the rest of your purchase documents.

Frequently asked questions

Do I pay GST on a ready to move flat in Bengaluru?

No. A ready to move flat that already has its occupancy certificate is treated as outside GST, so no GST is charged on that sale. GST applies to under construction property, not to completed homes sold after the occupancy certificate. This is why the certificate matters so much to your total cost.

What is the GST rate on an under construction flat?

Standard under construction residential flats are charged five percent GST, while flats that qualify as affordable housing are charged one percent, and in both cases without input tax credit for the buyer. These rates have applied since the scheme that took effect in April 2019, so budget for GST as a real line item on an under construction purchase.

Is GST included in stamp duty and registration?

No, they are entirely separate. GST is a central tax on the supply of under construction property, while stamp duty and registration are state charges you pay to register the sale deed. On an under construction flat you may face both GST and stamp duty and registration. Always budget for them separately rather than assuming a single charge covers everything.

How do I know if my flat qualifies as affordable for one percent GST?

A flat must meet defined value and carpet area limits to qualify as affordable housing, and the carpet area limit is tighter in metro cities like Bengaluru than in non metro areas. Do not rely on a builder labelling a project affordable. Ask how your unit qualifies on both value and carpet area before you assume the lower rate.

Last updated 2026-08-17. PropNewz Team.