GST on Under-Construction Flats: What Hyderabad Buyers Actually Pay

A buyer comparing two similar 2 BHK flats in Kokapet last month could not understand why the under-construction tower quoted a tax the ready-to-move one next door did not. The answer was GST. On the under-construction flat the builder added goods and services tax to the price, and on the completed flat with its occupancy certificate there was none. Same locality, same size, same builder, and a tax line that appeared on one invoice and vanished on the other. For a Hyderabad buyer, understanding when GST applies, and at what rate, is the difference between reading a quote correctly and being surprised at the payment stage.

The short answer. GST applies to under-construction residential property, not to a completed flat that already has its occupancy or completion certificate. On an under-construction home the rate is 1 percent for affordable housing and 5 percent for other residential flats, in both cases without input tax credit for the buyer. Commercial under-construction space is taxed at 12 percent with input tax credit. The trade off is real, a ready-to-move flat carries no GST but usually a higher sticker price, while an under-construction flat adds 1 or 5 percent tax but can cost less and let you pay in stages. Confirm the current rate on the official CBIC schedule before you sign.

When does GST actually apply to a home purchase?

GST applies only while a property is under construction, which is the single most useful rule to remember. The moment a building receives its completion or occupancy certificate, a sale of a unit in it is treated as a transfer of immovable property and falls outside GST, so a genuinely ready-to-move flat with a valid certificate attracts no GST at all. While the flat is still being built, the builder is supplying a construction service to you, and that service is what GST is charged on.

This is why the same flat can carry tax at one stage and none at another. If you buy early, during construction, you pay GST on the instalments. If you buy the identical unit after the certificate is issued, you pay no GST, though the seller has usually priced that advantage into the asking figure. Neither route is automatically cheaper, and the only way to compare is to put both quotes on the same page with the tax shown separately.

What are the current GST rates on residential flats?

The rate is 1 percent for affordable housing and 5 percent for all other residential units, and in neither case can the buyer claim input tax credit. Affordable housing is defined by two tests that must both be met, a carpet area up to 60 square metres in metro cities and up to 90 square metres in non-metro cities, and a total price not exceeding 45 lakh rupees. A flat that breaches either test is taxed at the higher 5 percent rate even if it only just crosses the line.

Because Hyderabad has both compact units that can qualify as affordable and larger premium flats that will not, the rate you pay depends on the specific unit, not on the city. Ask the builder in writing which rate applies to your unit and why, and match it against the carpet area and price tests yourself. Rates and definitions are revised through CBIC notifications from time to time, so treat any number, including the ones here, as something to confirm on the official CBIC website rather than assume.

What does no input tax credit mean for you?

No input tax credit means the builder cannot pass on, and you cannot claim, the GST the builder paid on cement, steel and other inputs. When the concessional 1 and 5 percent rates were introduced, the trade for the lower headline rate was the removal of input tax credit, so the tax you pay is a straightforward percentage of the price with nothing to set off against it. A detailed rate guide explains the mechanics in plain terms, and you can read one such breakdown on this GST on flat purchase explainer.

In practice this matters because some developers describe GST benefits or credit pass-throughs in their marketing. Under the current structure for residential flats there is no buyer-side credit to pass through, so treat any such claim with care and ask for the specifics in writing. What you pay is the rate on the price, full stop. The one thing worth doing is confirming that the rate on your cost sheet matches the unit you are buying, because an error in classifying a flat as affordable or not can change the tax by several percent of the price.

How does GST sit alongside stamp duty and registration?

GST and stamp duty are separate charges levied by different authorities, and you pay both where they apply. GST is a central tax on the construction service and applies only to under-construction property, while stamp duty and registration charges are state levies collected at the time you register the sale, and they apply whether the flat is under construction or ready. One does not replace the other.

A useful way to see it is that GST, where it applies, is paid to the builder as part of the instalments, while stamp duty and registration are paid to the state at the registry, so the two taxes also land at different moments in your payment timeline. For a full picture of your Hyderabad transaction cost, add the GST, if the flat is under construction, to the Telangana stamp duty and registration charges, and then to any society or maintenance deposits. Our guide to Telangana stamp duty and registration charges covers the state side, and together the two notes give you the real all-in number rather than just the base price.

Is GST charged on plots and land?

There is no GST on the sale of land or on a plot sold as plain land, because land is specifically kept outside GST. If you buy a ready plot and build later, the land purchase itself carries no GST, though any construction service you then engage will be taxed in the normal way. This is a common point of confusion, because buyers assume every property purchase carries GST when in fact land and completed buildings sit outside it. The practical takeaway is that GST attaches to construction, not to dirt and not to a finished certified home, so the tax follows the stage of the project rather than the act of buying.

Where it gets subtler is a plot sold with a construction-linked arrangement, or a villa plot bundled with a build contract, because then part of the deal may be a taxable construction service. The safe approach is to ask how the agreement is structured, land only or land plus construction, and get the GST treatment of each part stated in writing before you commit.

How should a Hyderabad buyer plan for GST?

Plan for GST as a known line in your budget, not a surprise at the payment desk. If the flat is under construction, work out whether it meets both affordable-housing tests, apply the right rate to the price, and add that to your cost sheet alongside stamp duty and registration. If you are weighing an under-construction unit against a ready one, compare them with the tax shown separately so you are not misled by a lower base price that hides a tax line. If you are buying into an active development such as Casagrand Vybe in Rajendra Nagar, ask the builder to put the applicable GST rate and the reason for it in the cost sheet.

Your GST checklist before booking

1. Confirm whether the flat is under construction or already has its occupancy or completion certificate.
2. If under construction, check both affordable tests, carpet area and the 45 lakh rupee price cap.
3. Apply the correct rate, 1 percent for affordable or 5 percent for other residential units.
4. Get the applicable GST rate stated in writing on the builder cost sheet.
5. Remember there is no buyer input tax credit on residential flats under the concessional rates.
6. Add stamp duty and registration separately, since GST does not replace them.
7. Verify the current rate and definitions on the official CBIC schedule before you sign.

Frequently asked questions

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

No, a ready-to-move flat that has a valid occupancy or completion certificate does not attract GST, because its sale is treated as a transfer of immovable property rather than a construction service. GST applies only while the property is under construction. If a seller adds GST to a certified ready flat, ask for the legal basis.

What is the GST rate on an under-construction flat?

The rate is 1 percent for affordable housing and 5 percent for other residential flats, in both cases with no input tax credit for the buyer. Affordable housing must meet a carpet area limit and a 45 lakh rupee price cap. Commercial under-construction space is taxed at 12 percent. Confirm the current figures on the official CBIC schedule before signing.

Can the builder give me input tax credit on my flat?

Under the current 1 and 5 percent residential rates there is no buyer input tax credit, because the concessional rates were introduced in exchange for removing that credit. So a claim that you will receive credit benefits on a residential flat does not hold. Ask for any such promise in writing and check it against the official rules.

Is GST charged when I buy a plot of land?

No, the sale of plain land or a plot sold as land carries no GST, because land is kept outside the tax. If the plot is bundled with a construction contract, the construction part can be taxable. The safe step is to ask how the agreement is split between land and construction, and get each part stated in writing.

Last updated 2026-10-13. PropNewz Team.