GST on Under Construction Flats: What a Bengaluru Buyer Pays

Two Bengaluru buyers in September 2026 compared near identical three bedroom flats in Whitefield, one still under construction and one ready to move with its completion certificate in hand. The sticker prices looked similar, but the under construction flat carried five percent GST on top, while the ready one carried none. On a one crore flat that is a five lakh rupee difference decided entirely by the stage of construction, and neither buyer had budgeted for it at first. GST is one of the largest costs a buyer can misjudge, precisely because it depends on when you buy, not just what you buy.

The short answer. GST applies only to under construction property, at five percent for most homes and one percent for affordable housing, in both cases without input tax credit, under the rates in force since 1 April 2019. A ready to move flat that already has its completion certificate carries no GST at all, and neither does a resale property. The trade-off is real: an under construction flat may be cheaper on the base price, but adding GST can narrow or erase that gap, so a buyer should always compare prices with GST included, not before it.

What is GST on a flat and when does it apply?

GST is a tax on the sale of an under construction property, and it does not apply once a property is completed. When you buy a flat while it is still being built, the builder charges GST on the amount you pay, because the law treats that as a supply of construction service. Once the building has received its completion certificate, a sale is no longer treated as a supply of service, so no GST is charged. This single distinction, under construction versus completed, is what decides whether you pay GST at all.

For a buyer, the practical meaning is that the same flat can carry GST or not depending purely on timing. Buy it before completion and GST applies to your payments. Buy it after the completion certificate, or buy a resale flat, and it does not. That is why the construction stage belongs at the top of your cost comparison, not as an afterthought.

What are the current GST rates on under construction homes?

The current rates, in force since 1 April 2019, are five percent for most under construction homes and one percent for affordable housing, both without input tax credit. These replaced the earlier structure of twelve percent for regular homes and eight percent for affordable housing, which had allowed the builder to claim input tax credit. The rates come from the GST Council's decision, notified by the Central Board of Indirect Taxes and Customs through Notification 03/2019 Central Tax Rate dated 29 March 2019, which you can look up on the official GST portal at cbic-gst.gov.in.

The number that matters for your budget is the one added to the price you actually pay the builder during construction. On a non affordable flat that is five percent of each payment, and on an affordable flat it is one percent, which is a meaningful difference on a large purchase. It is worth remembering that GST applies to the construction linked payments, not to the value of the land itself, which is why the rate is applied the way the notification prescribes rather than on the whole headline figure in every case. For a buyer the safest approach is to ask the builder to show the GST as a separate line on the demand for each stage, so you can see exactly what is being charged and confirm it matches the applicable rate.

What counts as affordable housing for the one percent rate?

Affordable housing, for the one percent rate, is defined by both size and price together. A home qualifies when its carpet area does not exceed sixty square metres in metropolitan cities, or ninety square metres in non metropolitan cities, and its value does not exceed forty five lakh rupees. Both conditions must be met, so a small flat priced above forty five lakh does not qualify, and neither does a cheaper but larger one. Bengaluru is treated as a metropolitan city for this purpose, so the sixty square metre carpet area limit applies here.

For a buyer, this matters because most mainstream Bengaluru apartments fall outside the affordable definition on price, and therefore attract the five percent rate rather than one percent. Do not assume a flat is affordable in the GST sense just because it feels modestly priced, check the carpet area and the value against both limits. The carpet area limit is measured on the RERA definition of carpet area, the net usable floor area within the walls, not the larger super built up figure a brochure often quotes, so use the correct area when you test whether a flat qualifies.

Why is there no GST on a ready to move flat?

There is no GST on a ready to move flat because, once a building has its completion certificate, selling it is not treated as a supply of goods or services under GST. At that point you are buying a finished immovable property, much like a resale flat, and GST simply does not attach to the transaction. This is why a completed flat and a resale flat both come without GST, while an under construction flat does not.

The table below shows how the position changes with the stage and type of property, so a buyer can see at a glance where GST applies.

Can the buyer or builder claim input tax credit?

Under the rates in force since April 2019, neither the builder nor the buyer can claim input tax credit on an under construction home. The builder pays GST on materials and services but cannot set that off, so those costs are built into the base price rather than passed through as a credit. For the buyer, this means the five percent or one percent you pay is a final cost with nothing to reclaim, and you should treat it as such in your budget. It is worth being wary of any sales pitch that suggests a GST benefit or credit on a residential flat, because for the buyer there is none to claim.

None of this is investment advice. The aim is simply to make sure the GST you pay is understood as a real, non recoverable part of the cost of an under construction home. The change in 2019 was a trade, lower headline rates in exchange for the loss of input tax credit, and for the buyer the visible result is a cleaner but final number. You no longer have to wonder whether a builder is passing on a credit fairly, because there is no credit to pass on, and the rate you see is the rate you pay.

How should a buyer factor GST into the budget?

Compare flats on the price including GST, and confirm in writing whether the quoted price already includes it. Because GST applies only to under construction property, a like for like comparison between an under construction and a ready to move flat is misleading until you add GST to the former. Ask the builder to state the base price and the GST separately, and check whether other charges are quoted with or without GST. For how this sits with the choice between the two, see our guide on ready to move versus under construction, and for the tax you separately deduct as a buyer, our note on TDS on a property purchase. A buyer weighing a project such as Sobha Galera in Kannamangala would price the GST in before comparing it with a completed flat.

A seven step GST check for buyers

Use this before you compare prices or sign anything.

1. Confirm whether the flat is under construction or has its completion certificate.
2. If completed or resale, expect no GST on the purchase.
3. If under construction, ask whether the one percent or five percent rate applies.
4. Check the carpet area and value against the affordable housing limits.
5. Ask the builder to state the base price and GST separately.
6. Confirm no input tax credit is being promised, because none is available.
7. Compare every option on the price including GST, not before it.

Frequently asked questions

Do I pay GST on a ready to move flat? No. Once a building has its completion certificate, selling the flat is not treated as a supply under GST, so no GST is charged. This is why ready to move flats with a completion certificate, and resale flats, come without GST, while under construction flats attract it. The construction stage decides whether GST applies.

What are the GST rates on an under construction flat? Since 1 April 2019, the rates are five percent for most homes and one percent for affordable housing, both without input tax credit. These replaced the earlier eight and twelve percent rates that allowed the builder a credit. The rate that applies to you depends on whether the flat meets the affordable housing limits on both carpet area and value.

What qualifies as affordable housing for the one percent rate? A home qualifies when its carpet area is up to sixty square metres in metropolitan cities, or ninety square metres in non metropolitan cities, and its value does not exceed forty five lakh rupees. Both conditions must be met. Bengaluru is treated as a metropolitan city, so the sixty square metre carpet area limit applies here alongside the price limit.

Can I claim input tax credit on GST paid for my flat? No. Under the rates in force since April 2019, neither the buyer nor the builder can claim input tax credit on an under construction residential flat. The GST you pay is a final cost with nothing to reclaim, so treat it as part of the price and be wary of any sales claim that suggests a GST credit or benefit.

Last updated 2026-09-19. PropNewz Team.