Two Bengaluru buyers compared notes on flats in the same corridor, at almost the same price. One had bought an under construction unit and paid five percent GST on the agreement value on top of everything else; the other had bought a ready flat with its occupancy certificate in hand and paid no GST at all. Same locality, same budget, and a difference of lakhs that came down to a single fact: whether construction was still going on when they bought. GST on a home is not a fixed cost of buying in the city. It is a cost of buying while the building is still being built, and knowing that line is worth real money.

The short answer. You pay GST only on an under construction flat, not on a completed one. For a normal under construction residential flat the rate is five percent of the agreement value, and for a flat that qualifies as affordable it is one percent, in both cases with no input tax credit passed to you. A ready to move flat that already has its occupancy or completion certificate carries no GST, and neither does a resale flat or a plain plot of land. GST is also separate from and paid on top of stamp duty, so an under construction buyer pays both. The trade off is real: buying earlier in the build can mean a lower price but adds five percent GST that a completed flat would not attract.

Do I pay GST when I buy a flat in Bengaluru?

Only if the flat is still under construction when you buy it. GST is a tax on the supply of construction services, so it applies while the builder is still constructing and selling you a work in progress, and it falls away once the building is complete and certified. That is why the same flat can carry GST at one stage of its life and none at another: buy it before completion and you are paying for a construction service that is taxed, buy it after the occupancy certificate and you are buying a finished immovable property, which is not. For a buyer, the practical result is that GST is not a fixed feature of every purchase in the city but a cost tied to timing, and the timing is something you can see and plan around rather than a surprise sprung at registration. The five percent and one percent are the effective rates after the value attributable to the land has already been accounted for, so you apply them to the agreement value the builder quotes rather than trying to strip out a land share yourself. The wider indirect tax changes that took effect in September 2025 left these property rates untouched, so the five and one percent figures a buyer plans around today are the same ones that applied before.

What are the GST rates?

The rate depends on whether the flat is under construction and, if so, whether it is affordable or not. The table below sets out how GST applies across the common purchase types a Bengaluru buyer meets.

The single most important line for cost is the first against the third: the very same flat attracts five percent while under construction and nothing once it has its occupancy certificate. That is why the stage at which you buy, not just the price, shapes what you actually pay.

What counts as affordable for the one percent rate?

A flat qualifies as affordable, and so attracts one percent rather than five, when it meets both a price and a size limit. The price has to be up to forty five lakh rupees, and the carpet area has to be within sixty square metres in a metropolitan city, which includes Bengaluru, or ninety square metres in non metropolitan areas. Both conditions must be satisfied together, so a flat under forty five lakh but larger than the carpet area limit does not qualify, and neither does a small flat priced above the limit. Because Bengaluru is treated as a metropolitan city, the tighter sixty square metre carpet area applies here. It is worth confirming the exact carpet area and the agreement value against these limits rather than assuming a modestly priced flat automatically gets the lower rate, since missing either limit moves you to the five percent band. In a city where prices and unit sizes have crept up, many flats that feel modest still fall on the five percent side of one or other line.

Why does an occupancy certificate remove GST?

Because once a building has its completion or occupancy certificate, selling a flat in it is the sale of a finished property, not the supply of a construction service, and only the construction service is taxed. The certificate is the legal marker that construction is over, so a sale after it is treated as a transfer of immovable property, which sits outside GST. This is why a ready to move flat with its certificate in hand carries no GST, and why the same developer selling the same layout can charge GST on units sold before completion and none on units sold after. For a buyer weighing an under construction unit against a ready one, the five percent is a genuine part of the comparison, and a completed flat can be closer in total cost to an under construction one than the headline prices suggest. It is worth confirming that the certificate has actually been issued for the specific building or wing you are buying into, not merely promised, because it is the certificate, and not the developer's assurance that possession is near, that decides whether GST applies to your particular unit.

Can I claim input tax credit on the GST I pay?

No. Under the regime that has applied since April 2019, the builder does not pass on input tax credit to residential buyers, and you as a buyer cannot claim it either. This matters because it means the five percent or one percent you pay is a real, final cost, not something you recover later, so it should be added in full to your budget. In the earlier system a higher headline rate came with input credit that offset part of the cost, but the current lower rates come without it, which is the trade the change made. The takeaway for a buyer is simple: treat the GST on an under construction flat as money spent, not money advanced, and plan for it alongside the other unrecoverable costs of buying.

How do I handle GST when budgeting?

Work out early whether your purchase attracts GST at all, and if it does, add it as a real cost.

1. Establish whether the flat is under construction or already has its occupancy certificate.
2. If it is ready and certified, or a resale, plan for no GST on the purchase.
3. If it is under construction, apply five percent of the agreement value as the default.
4. Check the price and carpet area against the affordable limits for the one percent rate.
5. Remember Bengaluru is a metro, so the sixty square metre carpet limit applies here.
6. Add the GST on top of stamp duty and registration, not instead of them.
7. Treat the GST as unrecoverable, since no input tax credit reaches the buyer.

How does GST sit with stamp duty and TDS?

GST is one of several charges an under construction buyer pays at once, and it is easy to conflate them, so it helps to keep them separate. GST is a tax on the construction service paid to the builder, while our guide to Karnataka stamp duty and registration charges covers the separate duty paid to the state on the transfer, and both apply to an under construction flat at the same time. On top of that, our note on filing Form 26QB for TDS on a property purchase explains the tax you deduct from the seller, which is different again. If you are pricing an under construction project such as Purva Meraki in HSR Layout, layer GST, stamp duty, registration and TDS onto the base price so that the number you compare against a ready flat is the true all in cost, not just the sticker.

Frequently asked questions

Do I pay GST on a ready to move flat? No. A flat that already has its occupancy or completion certificate carries no GST, because you are buying a finished property rather than a construction service. The same applies to a resale flat and to a plain plot of land. GST applies only while a flat is still under construction when you buy it.

What is the GST rate on an under construction flat? Five percent of the agreement value for a normal residential flat, and one percent if it qualifies as affordable, in both cases with no input tax credit passed to the buyer. The rate is charged on the agreement value and is separate from, and paid on top of, the stamp duty and registration you pay to the state.

Which flats count as affordable for one percent GST? Those meeting both a price limit of up to forty five lakh rupees and a carpet area limit, which is sixty square metres in a metropolitan city such as Bengaluru or ninety square metres elsewhere. Both conditions must be met together, so missing either the price or the size limit moves the flat to the five percent rate.

Can I get input tax credit on GST for my flat? No. Under the rules in force since April 2019, neither the builder passes on nor the residential buyer can claim input tax credit, so the GST you pay is a final, unrecoverable cost. Budget for it in full alongside the other costs of buying rather than expecting to recover any part of it later.

Last updated 2026-08-30. PropNewz Team.