Two Bengaluru flats can sit in the same tower at the same price, and one can cost you lakhs more than the other. The difference is a single line on the invoice, GST. Buy an under construction flat and you pay Goods and Services Tax on top of the price. Buy the finished flat next door, the one whose builder already holds an occupancy certificate, and you pay no GST at all. Understanding GST on under construction property in Bengaluru is how you stop that gap from surprising you at the payment stage.

The short answer. An under construction home in Bengaluru attracts 5 percent GST, or just 1 percent if it qualifies as affordable housing, and in both cases the builder cannot pass on input tax credit. A ready to move home, where the developer has already obtained the occupancy or completion certificate, attracts no GST. The upside of under construction is usually a lower headline price and a longer payment runway. The trade-off is the added GST and the construction risk that a finished flat has already cleared. Quick fact: under construction residential GST is 5 percent, or 1 percent for affordable homes priced up to 45 lakh, while a ready to move flat with an occupancy certificate pays zero, per current GST rules and HomeFirst.

This guide explains when GST applies, the rates, what counts as affordable, and why the occupancy certificate is the line that decides whether you pay.

When does GST apply to a home purchase?

GST applies only while a property is still under construction, and it falls away the moment the building is legally complete. The logic is that an under construction flat is treated as a supply of construction service, which is taxable, while a completed building is immovable property, which is outside GST. So the tax is not really about the flat, it is about the stage at which you buy it. Buy before the completion paperwork and GST applies. Buy after, and it does not.

For a Bengaluru buyer, this reframes the choice between under construction and ready to move as partly a tax decision. It is not the only factor, but on a large purchase the GST line is big enough to belong in your comparison from the start, not as a footnote discovered near registration.

What are the GST rates on an under construction flat?

The residential rates are simple to state and were set in the 2019 restructuring of property GST. A non affordable under construction home carries 5 percent GST, an affordable one carries 1 percent, and neither allows the builder to pass input tax credit to you. Ready to move homes with a completion certificate carry nothing. The table sets out the full picture, including plots and commercial units.

The GST 2.0 rate changes that took effect on 22 September 2025 left this residential structure untouched, so the 1 percent and 5 percent rates still stand. Because there is no input tax credit on residential purchases, the rate you see is the rate you bear, with nothing flowing back to soften it.

Which Bengaluru flats count as affordable at 1 percent?

A flat qualifies for the 1 percent rate only if it clears both an area test and a price test. The carpet area must not exceed 60 square metres in a metropolitan city, and Bengaluru is treated as one, while the price must not exceed 45 lakh. In non metropolitan areas the area limit rises to 90 square metres, but the 45 lakh price cap stays the same. Miss either limit and the flat falls into the 5 percent bracket, even if it clears the other by a wide margin.

This matters because the two conditions are joint, not alternative. A compact flat priced at 50 lakh does not qualify, and a cheap flat larger than the area cap does not either. For a buyer hunting the 1 percent rate in Bengaluru, both the carpet area and the agreement value have to sit inside the limits, so confirm the exact carpet area rather than the super built up figure a brochure quotes.

Why does a ready to move flat with an OC pay no GST?

Because once the developer holds an occupancy or completion certificate, the flat is no longer a construction service, it is finished immovable property, and the sale sits outside GST. The crucial detail is the timing. What decides your GST is whether the certificate was issued before your agreement, not when you physically get the keys. A flat sold to you before the certificate is issued is an under construction supply to you, and it carries GST, even if it looks finished.

The practical rule for a buyer is therefore precise. If you want the no GST benefit of a ready to move home, confirm that the occupancy or completion certificate was already issued when you signed, and get a copy. Our guide to the occupancy certificate and completion certificate in Bengaluru explains what a valid certificate looks like and why you should never take possession without one.

Under construction versus ready to move, what is the real cost?

Set the two side by side and the GST is only one line in a bigger sum. An under construction flat often carries a lower base price, a staged payment plan that eases cash flow, and the chance to buy early in a project. Against that, you add 5 percent GST on most homes, you carry construction and delay risk, and you may pay pre EMI on your loan while you wait, a cost we cover in our note on pre EMI versus full EMI on an under construction home.

A ready to move flat flips the maths. You pay no GST and you carry no construction risk, but the price is usually higher and the whole amount is due sooner. The honest comparison is not GST alone, it is the base price plus GST plus financing cost and risk on one side, against a higher but certain price on the other. For many buyers, a mid stage under construction flat with a strong developer, for example a project like Brigade Eldorado in Bagalur, balances price and risk, but the right answer depends on your cash flow and your appetite for waiting.

What should a buyer check on GST before booking?

Work through these before you sign.

1. Establish whether the flat is under construction or already has an occupancy or completion certificate.
2. If it is under construction, confirm whether it is taxed at 5 percent or the 1 percent affordable rate.
3. For the 1 percent rate, verify both the carpet area limit and the 45 lakh price cap, together.
4. Ask for the GST to be shown as a separate line in the cost sheet, not folded into a vague all in price.
5. For a ready to move flat, obtain a copy of the certificate and confirm it predates your agreement.
6. Remember that a plot purchase carries no GST, so treat any GST charged on bare land as a red flag.
7. Factor the GST into your total outflow alongside stamp duty, registration and financing cost.

Getting these right turns GST from a nasty surprise into a known number you have already budgeted for.

What about plots and commercial property?

Plots are the simplest case. The sale of land, including a developable plot with basic infrastructure, does not attract GST, a position the tax authority reaffirmed in a circular in August 2022. So if you are buying a site rather than a building, GST should not appear on your invoice at all, and its presence is a question to raise before you pay. Any construction you later commission on that plot is a separate service and taxed on its own terms.

Commercial under construction property is treated differently from homes. It carries 12 percent GST, but with input tax credit available, which changes the calculation for a buyer who can use that credit. For a residential buyer the takeaway is cleaner. Confirm the stage, confirm the rate, insist on a separate GST line, and prize the occupancy certificate, because it is the single document that can move your purchase from taxed to tax free. Read that way, GST stops being a hidden charge and becomes one more number you control before you commit.

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

An under construction residential flat in Bengaluru attracts 5 percent GST if it is non affordable, or 1 percent if it qualifies as affordable housing. Neither rate allows the builder to pass input tax credit to the buyer. A ready to move flat with an occupancy or completion certificate attracts no GST at all.

Which flats qualify for the 1 percent affordable GST rate?

A flat qualifies for 1 percent GST only if it meets both tests, a carpet area up to 60 square metres in a metro city such as Bengaluru, or 90 square metres elsewhere, and a price up to 45 lakh. Both conditions must hold. Miss either one and the flat is taxed at 5 percent.

Do I pay GST on a ready to move flat?

No, provided the developer obtained the occupancy or completion certificate before your purchase agreement. Once that certificate is issued, the flat is completed immovable property and falls outside GST. The deciding factor is the certificate date relative to your agreement, not when you take physical possession of the flat.

Is there GST on buying a plot of land?

No. The sale of land, including a developable plot with basic infrastructure, does not attract GST, a position the tax authority reaffirmed in an August 2022 circular. If a seller charges GST on bare land, treat it as a red flag and clarify before paying. Any later construction you commission is taxed separately.

Last updated 2026-07-10. PropNewz Team.