GST on Under Construction Flats in Bengaluru: A Buyer Guide
When GST applies to a Bengaluru flat, the 5 percent and 1 percent rates, the affordable housing limits, and why a ready flat with an OC carries none.
Two buyers we will call Meghna and Sameer compared near identical Bengaluru flats in 2026, one under construction and one ready to move with its occupancy certificate. The sticker prices looked the same, but Meghna's under construction flat carried 5 percent GST on top, adding several lakh rupees, while Sameer's ready flat carried none. Same home, same price, one tax line that changed the total by lakhs. GST is one of the least understood costs in a new home purchase, and it hinges on a single factor: whether the flat is ready or still under construction.
The short answer. GST applies only to under construction flats, at 5 percent for regular homes and 1 percent for affordable housing, with no input tax credit passed to buyers. Ready to move flats that already have their occupancy certificate, and resale flats, carry no GST at all. Affordable housing means a carpet area up to 60 square metres in a metro like Bengaluru and up to 90 square metres elsewhere, with a price up to 45 lakh rupees. The trade off is that an under construction flat can cost less upfront but adds GST, while a ready flat avoids GST but is usually priced higher, so compare the full cost including tax before you decide.
When does GST apply to a flat purchase?
GST applies when you buy an under construction flat, because you are paying for a construction service, and it does not apply once the flat is a completed, ready to move property with its occupancy certificate. The practical test is timing: if the occupancy certificate is issued before your sale agreement is executed, the flat is treated as immovable property and GST generally does not apply. If you buy while the building is still under construction, GST is charged on your instalments. This single distinction, under construction versus ready with an OC, is what decides whether GST is on your bill at all.
The timing point deserves emphasis because it can swing a decision. A project that is weeks away from its occupancy certificate is still under construction for GST purposes until that certificate is actually issued, so buying just before the OC still attracts GST while buying just after does not. If you are close to that line, it can be worth understanding where the project stands, since the difference is not a rounding error but a full 5 percent of the price on a regular flat. That said, chasing the OC purely to save GST is not always wise, because a ready flat is usually priced higher in the first place, and the seller has already captured much of that value.
What are the GST rates on under construction flats?
The GST rate on an under construction residential flat is 5 percent for a regular home and 1 percent for one that qualifies as affordable housing. Both of these are concessional rates that come without input tax credit, meaning the builder cannot pass on credit for the tax paid on construction inputs, and the rate you see is the rate you pay. On a regular flat, 5 percent of the price can be a substantial sum, so it belongs in your budget from the start rather than as a surprise at the payment stage. Confirm the applicable rate for your specific flat with the builder and against the current rules.
What counts as affordable housing for the 1 percent rate?
A flat qualifies for the lower 1 percent GST as affordable housing only when it meets both a size and a price condition. The carpet area must be up to 60 square metres in a metro city such as Bengaluru, or up to 90 square metres in a non metro city, and the total price must not exceed 45 lakh rupees. Both conditions must be satisfied together, so a flat within the size limit but above the price cap does not qualify, and neither does a larger flat under the price cap. Because Bengaluru is treated as a metro, the 60 square metre carpet area limit is the one that applies here.
Why is there no input tax credit for buyers?
Under the concessional GST regime in force since April 2019, input tax credit is not available to either the buyer or the builder on residential flats at the 1 and 5 percent rates. Earlier, a higher headline GST rate came with input tax credit that builders could in principle pass on, but the current structure trades that credit for a lower, simpler rate. For you as a buyer, the effect is straightforward: there is no credit to claim and no adjustment to chase, so the GST you pay is a clean cost. It also means you should be cautious of any builder claim about passing on input credit at these rates.
Do ready to move and resale flats attract GST?
No, ready to move flats with a valid occupancy certificate and resale flats do not attract GST. A ready flat with its OC is treated as a sale of immovable property, which falls outside the scope of GST, and a resale flat from an individual owner is the transfer of an existing asset rather than a construction service, so it too is exempt. This is why the occupancy certificate matters twice over: it makes the home legally liveable and it marks the point beyond which GST no longer applies. When you compare a ready flat with an under construction one, remember the ready flat's freedom from GST is part of its value.
How does GST fit my full Bengaluru cost?
GST sits alongside your price, stamp duty and registration, and loan charges as part of the true cost of a new home. On an under construction flat, add the GST to your budget, and remember that stamp duty and registration apply separately on top. For those statutory charges, see our guide to Bengaluru stamp duty and registration charges, and for the certificate that marks the GST cutoff and legal possession see our guide to the occupancy certificate versus the completion certificate. If you are weighing a new launch such as Sattva's new launch in Jigani, the under construction status means GST will form part of your total.
What GST mistakes do buyers make?
The most common mistake is comparing an under construction flat and a ready flat on price alone, ignoring that the under construction one carries GST. Others assume affordable housing status from size alone while missing the price cap, or the reverse, and some believe a builder can hand them input tax credit at the concessional rates, which is not how the current regime works. A few buyers of nearly finished projects do not check whether the occupancy certificate has been issued, which is the very point that decides GST. Compare full costs, confirm the OC status, and check both affordable conditions. It also helps to ask the builder for a clear payment schedule showing how GST is applied to each instalment, so you can see the tax as it accrues rather than discovering it in a lump at the end. A transparent builder will lay this out in writing without hesitation, and a reluctance to do so is itself a small warning sign worth noting.
| Property type | GST | Note |
| Under construction, regular | 5 percent | No input tax credit |
| Under construction, affordable | 1 percent | Size and price limits apply |
| Ready to move with OC | Nil | Outside GST scope |
| Resale from an owner | Nil | Transfer of existing asset |
Your Bengaluru GST checklist
Run through these seven steps before you fix your budget on a new home.
- Confirm whether the flat is under construction or ready to move with an OC.
- If under construction, note that GST applies and add it to your budget.
- Check whether the flat meets both affordable conditions for the 1 percent rate.
- Use the 60 square metre carpet area limit for Bengaluru as a metro.
- Confirm the price cap of 45 lakh rupees for affordable status.
- Do not expect input tax credit at the concessional rates.
- Compare an under construction and a ready flat on full cost including GST.
Factor GST in from the start and the under construction versus ready decision becomes a fair, full cost comparison. Ignore it and, like a buyer dazzled by a lower sticker price, you can be surprised by lakhs added at the payment stage.
Confirm current rates and rules on the official Central Board of Indirect Taxes and Customs website, and for a plain language buyer summary see this GST on flat purchase guide. Rates and thresholds can change, so verify the current position before you budget.
Frequently asked questions
Is GST charged on a ready to move flat?
No. A ready to move flat that already has its occupancy certificate is treated as a sale of immovable property and falls outside the scope of GST, and resale flats are also exempt. GST applies only to under construction flats, so if the occupancy certificate is issued before your sale agreement, GST generally does not apply.
What is the GST rate on an under construction flat?
The GST rate is 5 percent for a regular under construction residential flat and 1 percent for one that qualifies as affordable housing. Both are concessional rates without input tax credit, so the rate you see is the rate you pay. Confirm the applicable rate for your specific flat with the builder and against the current rules.
What qualifies as affordable housing for 1 percent GST?
A flat qualifies only when it meets both conditions: a carpet area up to 60 square metres in a metro like Bengaluru or up to 90 square metres in a non metro city, and a total price not exceeding 45 lakh rupees. Both conditions must be satisfied together for the 1 percent rate to apply.
Can I claim input tax credit on my flat purchase?
No. Under the concessional GST regime in force since April 2019, input tax credit is not available to the buyer or the builder on residential flats at the 1 and 5 percent rates. There is no credit to claim, so treat the GST as a clean cost you budget for upfront.
Last updated 2026-09-26. PropNewz Team.
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