Two buyers in Bengaluru compare near-identical three bedroom flats in the same Whitefield micro-market in 2026. One flat is under construction and quoted at ninety lakh rupees, the other is ready to move at ninety four. The under-construction flat looks cheaper until the tax line is added: 5 percent Goods and Services Tax on the ninety lakh, about 4.5 lakh rupees, that the ready flat does not attract at all. Suddenly the gap narrows, and the real comparison is not price against price but price plus GST against price plus certainty.

The short answer. In 2026 a Bengaluru buyer pays 5 percent GST on an under-construction flat in the standard segment, or 1 percent on an affordable home that meets the price and size limits, and zero GST on a ready-to-move flat that already has its completion or occupancy certificate. No input tax credit is passed on at these rates. The trade-off is straightforward: the under-construction flat can cost less up front but adds GST and delivery risk, while the ready flat carries no GST and no wait but usually a higher sticker price.

Quick facts for July 2026: residential GST rates are 5 percent for standard under-construction homes and 1 percent for affordable ones, both without input tax credit, and are levied under rules issued by the Central Board of Indirect Taxes and Customs. A completed flat with an occupancy certificate is treated as a finished good and falls outside GST.

How much GST do you pay on an under-construction flat in Bengaluru?

A standard under-construction residential flat attracts 5 percent GST on the amount paid to the builder, with no input tax credit passed on to you. The rate applies to the construction component of the price, since land is not taxable, but the scheme already builds in a deemed one-third deduction for land value, so in practice you compute 5 percent on the full agreement value the builder invoices. On a ninety lakh rupee flat that is about 4.5 lakh rupees, paid to the builder alongside your instalments rather than at registration.

This GST is separate from stamp duty and registration, which you also pay to the state on the same purchase. Buyers frequently confuse the two and under-budget as a result, treating GST as if it were part of the registration bill. In Bengaluru you should plan for both: roughly 6.6 percent stamp duty and registration to the state, and 5 percent GST to the builder on an under-construction home.

Why is there no GST on ready-to-move flats?

Because a completed flat is treated as an immovable good rather than a supply of construction service. Once a project receives its completion or occupancy certificate, a sale of that flat is a transfer of finished property, and GST, which taxes the supply of under-construction works, no longer applies. This is why a ready-to-move flat with a valid occupancy certificate carries no GST, and why that certificate is such an important document to verify before you buy.

The practical implication is a genuine saving on ready homes that offsets part of their price premium. A buyer weighing the two options should compare the under-construction price plus 5 percent GST against the ready price with no GST, not the bare sticker prices. Our guide to choosing between ready-to-move and under-construction homes in Bengaluru works through this trade-off in detail.

What qualifies as affordable housing for the 1 percent rate?

The 1 percent rate applies to homes that meet both a price ceiling and a carpet area limit set under the GST rules. Broadly, the flat must be priced up to 45 lakh rupees and fall within a carpet area cap that is smaller in metro cities than in non-metro areas. A flat that satisfies both conditions is taxed at 1 percent without input tax credit; one that breaches either the price or the size limit falls into the standard 5 percent bracket.

For a Bengaluru buyer at the entry level, this distinction is worth real money, because slipping just over the 45 lakh threshold moves the whole purchase from 1 percent to 5 percent GST. It is worth confirming with the builder, in writing, which rate applies to your specific unit and why, and checking that the carpet area on the agreement matches the definition used for the affordable classification.

How do the GST rates compare across property types?

The rate depends entirely on what you are buying and whether it is complete. Under-construction standard and affordable homes sit at 5 percent and 1 percent respectively, ready-to-move residential attracts nothing, and land and plots are outside GST altogether. Commercial under-construction space is taxed differently again. The table below sets out the 2026 position so you can place your purchase in the right bracket before you budget.

Confirm the applicable rate and classification for your exact unit with the builder and, where the sums are large, a tax adviser, since misclassification can cost lakhs on either side.

Does the buyer or the builder pay GST?

The builder is liable to deposit GST with the government, but the cost is passed to you as the buyer within the price you pay on each instalment. In effect you fund it, so it belongs in your budget even though you never file it yourself. Your protection is the builder's invoice: it should show the GST component separately, at the correct rate, on the taxable value.

Ask for GST-compliant invoices for every payment and check that the rate charged matches your unit's classification. A builder charging 5 percent on a flat that clearly qualifies as affordable, or applying GST to a ready flat that should carry none, is overcharging you, and the paperwork is where you catch it. Reading the builder-buyer agreement carefully, as covered in our note on builder-buyer agreement clauses to check in Bengaluru, helps you confirm how taxes are stated before you sign.

How should GST shape your under-construction versus ready decision?

Treat GST as a real 5 percent addition to the under-construction price and let it inform, not decide, the choice. On a standard flat, the 5 percent GST narrows much of the discount that under-construction projects advertise over ready ones, so the case for buying early rests more on the specific price, the developer's track record and your willingness to wait than on tax alone. Where an under-construction flat is genuinely much cheaper even after GST, and the developer is reliable, it can still be the better buy.

The honest trade-off is tax and certainty against price and risk. A ready flat costs more per square foot but carries no GST, no construction delay and immediate use or rent. An under-construction flat can save money even after 5 percent GST, but you accept delivery risk and a wait. Run both totals, GST included, before you let a headline price decide for you.

A seven-point checklist for GST on a Bengaluru flat

1. Confirm in writing whether your flat is under construction or ready with a valid occupancy certificate.
2. Establish the correct GST rate for your unit, 5 percent standard, 1 percent affordable, or nil for ready.
3. Check that the flat's price and carpet area actually meet the affordable limits before accepting a 1 percent quote.
4. Add GST to the under-construction price and compare that total against the ready flat's price with no GST.
5. Insist on GST-compliant invoices showing the tax component separately for every instalment.
6. Remember GST is separate from and additional to stamp duty and registration paid to the state.
7. Where the amounts are large, have a tax adviser confirm the classification before you commit.

Work through these and GST becomes a line you have planned for rather than a surprise on the builder's demand note. The buyers who feel cheated are usually those who compared a taxed under-construction price against an untaxed ready price without ever putting the two on the same footing.

Is GST charged on ready-to-move flats in Bengaluru?

No. A ready-to-move flat that has received its completion or occupancy certificate is treated as finished property and falls outside GST, so you pay no GST on it. This is a real saving that partly offsets the higher sticker price of ready homes. Always verify the occupancy certificate is genuine and in place, since it is what removes the GST liability.

What is the GST rate on affordable housing in 2026?

Affordable under-construction homes are taxed at 1 percent without input tax credit, against 5 percent for standard homes. To qualify, the flat must meet both a price ceiling, broadly up to 45 lakh rupees, and a carpet area limit that is tighter in metro cities. Slipping over either limit moves the purchase to the 5 percent bracket, so confirm your unit's classification in writing.

Is GST included in the property price or charged separately?

GST is charged separately from the base price and added to each payment you make to the builder, though the builder deposits it with the government. It is also separate from stamp duty and registration, which you pay to the state. Budget for GST on the builder invoice and for stamp duty and registration at the sub-registrar as two distinct costs.

Can I claim input tax credit on an under-construction flat?

No. At the current 5 percent and 1 percent residential rates, input tax credit is not available to the builder to pass on, which is why these rates are lower than the earlier credit-linked rates. As a buyer you simply pay the applicable rate on your instalments; there is no separate credit for you to claim against the GST on your home purchase.

Last updated 2026-07-01. PropNewz Team.