GST on an Under Construction Flat in Hyderabad: 5 Percent, 1 Percent or None

On a Sunday site visit to Kollur in August 2026, a young couple fell for a two bedroom flat quoted at 78 lakh. They had saved carefully, lined up a loan, and felt ready. Then the sales desk slid across a cost sheet with a line they had not planned for, 3.9 lakh of goods and services tax, and the number on the cheque jumped overnight.

That surprise is avoidable. GST on a home is not random, it follows a simple rule tied to one thing, whether the building is still under construction or already finished. Get that rule right and you know your tax before you sign anything.

The short answer. An under construction flat in Hyderabad carries 5 percent GST on the agreement value, or 1 percent if it is an affordable home, and neither rate comes with input tax credit. A ready to move flat that already holds its occupancy certificate carries no GST, and neither does a resale flat or a plot of land. The trade off is real. Buy early in the build and you pay GST but often a lower base price, buy after the occupancy certificate and you skip GST but usually pay more per square foot.

Why does an under construction flat cost more than its sticker price?

Because the price on the brochure is only the base, and GST rides on top of it. When a builder is still constructing your flat, the law treats your purchase as a supply of construction service, and that service is taxable. So a flat advertised at 78 lakh in a project that is months from completion is really 78 lakh plus GST, before you even reach stamp duty and registration.

The tax is collected by the builder, who then pays it to the government, so you never deposit it yourself. But it is your money, and it belongs in your budget from day one. On a large purchase the figure is not small, and buyers who discover it late often scramble to rearrange their down payment at the worst possible moment.

A quick example makes it concrete. On that 78 lakh flat in Kollur the 5 percent works out to 3.9 lakh, and because the home is priced well above 45 lakh it cannot claim the 1 percent affordable rate. Stack the roughly 6 percent of stamp duty, transfer duty and registration on top, and the government charges alone approach 8.5 lakh on a 78 lakh home. None of that shows on the hoarding outside the site, which is why buyers who read only the base price are the ones who get caught.

What GST rate applies to your Hyderabad flat?

It is 5 percent for a normal under construction flat and 1 percent for an affordable one, both without input tax credit. The rates below have applied to housing since the structure was reset in 2019, and they sit on the agreement value of the home. The table shows how the same rule plays out across the kinds of property a Hyderabad buyer actually looks at.

Commercial units follow a different track, taxed at 12 percent with input tax credit, but for a home buyer the two residential rates are the ones that matter. You can read how these rates stack up against your other transaction costs in our guide to Telangana stamp duty and registration charges.

When does a flat qualify for the 1 percent affordable rate?

Only when it clears two limits together, one on price and one on size. The home must be priced up to 45 lakh, and its carpet area must not exceed 60 square metres, because Hyderabad is one of the notified metropolitan cities where the tighter 60 square metre limit applies rather than the 90 square metre limit used in smaller towns.

Both tests must pass. A compact flat that costs 52 lakh is not affordable for GST even if it is tiny, and a cheap flat that sprawls past 60 square metres of carpet is not affordable either. Notice that the size test uses carpet area, the space inside your walls, not the super built up area that salespeople love to quote. That distinction alone can decide whether you pay 1 percent or 5 percent, so confirm the carpet number in writing before you assume the lower rate.

Why do ready to move and resale flats attract no GST?

Because once a building is legally complete, selling it is no longer a service, it is the transfer of finished property, and that sits outside GST. The moment a project receives its occupancy or completion certificate, a flat in it stops being a construction service and becomes immovable property. Selling immovable property is kept out of the tax net, so a ready to move home carries no GST.

The same logic frees a resale flat. When an individual owner sells you a previously owned home, there is no builder supplying construction and no GST to charge. Land and developed plots are treated the same way, with no GST on the sale. This is why timing matters so much. Two flats at the same address can carry very different tax simply because one sold before the certificate and one sold after.

One caution sits inside this good news. A flat is only truly outside GST once the occupancy certificate genuinely exists, so a builder who says a project is complete but cannot show the certificate is not yet selling you a finished home for tax purposes. Ask to see the actual certificate, not a promise of one, before you treat the purchase as tax free.

What does no input tax credit really mean for you?

It means the builder cannot hand back the tax they paid on cement, steel and services, so that cost stays baked into your price. Under the current housing rates, developers give up input tax credit in exchange for the low 1 and 5 percent figures. In practice the builder recovers their own tax through the base price, which is one reason under construction rates per square foot are set the way they are.

It also helps to know what the tax sits on. Under the current scheme the 5 and 1 percent apply to the full agreement value, with the deduction for the land share already built into those low rates, so do not expect a separate land discount on your bill. Charges a builder bundles into that agreement, such as floor rise, preferential location and covered parking, usually form part of the taxable value too, so ask for a full break up rather than a single rounded figure.

For you as the buyer, the takeaway is plain. The 5 percent is a real, final cost with nothing to claim back, so treat it as part of the purchase, not a refundable deposit. Always ask for the GST to be shown as a separate line on every receipt, with the builder's GST number printed, so your paper trail is clean if you ever need it. If you are also checking the seller's dues, our note on GHMC property tax before you buy pairs naturally with this one.

How should you plan for GST before you book?

Start by pinning down the one fact that sets everything, the construction stage, and work outward from there. A project such as Altura by AR Homes in Kollur is the kind of under construction address where the 5 percent question is live, so run this checklist before you commit.

1. Confirm in writing whether the flat is under construction or already holds its occupancy or completion certificate.
2. Ask the builder for the exact GST rate on your agreement, 5 percent or 1 percent, and see it on the cost sheet.
3. Test both affordable limits yourself, the 45 lakh price and the 60 square metre carpet area, before assuming 1 percent.
4. Insist that the carpet area is stated clearly, since the affordable size test ignores super built up area.
5. Check that GST is quoted on the base price alone and not layered on top of stamp duty or registration.
6. Collect every receipt showing GST separately along with the builder's GST number.
7. If you are buying ready to move, verify the occupancy certificate so you correctly pay nothing.

Do this and the tax stops being a surprise at the sales desk and becomes just another known number in your plan, sitting beside your loan, your stamp duty and your registration fee.

Frequently asked questions

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

No. Once a flat has its occupancy or completion certificate it counts as a finished property and sits outside GST, so a ready to move or resale home attracts no GST at all. You still pay Telangana stamp duty and registration on that flat, but the tax on construction simply does not apply once the building is legally complete.

What is the GST rate on an under construction flat in Hyderabad?

A non affordable under construction flat attracts 5 percent GST with no input tax credit. An affordable unit, priced up to 45 lakh with a carpet area up to 60 square metres, attracts just 1 percent. The rate is charged on your agreement value, and the builder collects it from you and pays it to the government.

Does my flat qualify for the 1 percent affordable rate?

Only if it clears both limits at once. The price must not exceed 45 lakh and the carpet area must stay within 60 square metres, because Hyderabad is a notified metropolitan city. Miss either limit, on price or on size, and your flat falls into the ordinary 5 percent bracket instead of the concessional one.

Does GST apply to land or to a resale flat?

No on both counts. The sale of land or a developed plot carries no GST, and a resale flat sold by an individual owner is exempt entirely. GST reaches only the construction of an under construction home, which is exactly why the stage at which you buy changes the tax you pay on the same address.

Sources opened for this article include HomeFirst on GST on flat purchase and Razorpay on GST on flat purchase. Rates can change with government notifications, so confirm the current figure with your builder and a tax professional before you sign.

Last updated 2026-09-09. PropNewz Team.