GST on Flats in Bengaluru 2026: When You Pay 1 Percent, 5 Percent or Nothing

Two flats in the same Sarjapur Road project, identical floor plans, one floor apart. The buyer of the first paid 4 lakh rupees that the buyer of the second never will. The difference was a single document: the first buyer booked while the tower was under construction and paid 5 percent GST on his 80 lakh rupee agreement, while the second bought after the occupancy certificate was issued, when the same flat had legally become a completed good on which GST simply does not apply. Few line items in a home purchase swing this much money on a question of timing, and few are as poorly understood at the negotiation table.

The short answer. In 2026, an under-construction flat attracts GST at 1 percent if it qualifies as affordable housing and 5 percent otherwise, both without input tax credit. A ready-to-move flat with a valid occupancy or completion certificate attracts no GST at all, and neither do resale flats or plain plots. The trade-off: the GST-free ready flat usually carries a price premium and no construction-linked payment plan, so the honest comparison is total cost against total cost, not tax against tax.

Which purchases attract GST, and which never do?

GST applies to the supply of construction services, which is what you are buying when you pay a developer for a flat that does not fully exist yet. Once a building is complete and certified, the law treats the flat as immovable property, a completed good, and the sale falls outside GST entirely. Both Razorpay's guide and MyGate's explainer draw the same map for 2026: 1 percent without input tax credit for under-construction affordable housing, 5 percent without input tax credit for other under-construction homes, nothing on ready-to-move flats with a valid occupancy certificate, nothing on resale, and nothing on developable plots. In Bengaluru terms: the new launch in Devanahalli is taxed, the same flat bought after handover is not, and the fifteen-year-old resale in Indiranagar never was.

What counts as affordable housing for the 1 percent rate?

The definition has two gates and both must be cleared: a price cap of 45 lakh rupees, and a carpet area cap of 60 square metres in metro cities, which includes Bengaluru, or 90 square metres elsewhere. Sixty square metres is roughly 646 square feet of carpet area. Here is the uncomfortable Bengaluru reality: at 2026 prices, very little new supply inside the city fits under 45 lakh rupees, so the 1 percent rate mostly lives in far-periphery projects and compact configurations. Most Bengaluru buyers reading this will pay the 5 percent rate on an under-construction purchase, and budgeting 5 percent and discovering 1 percent is a far better surprise than the reverse. Check both the carpet area in your agreement and the all-in price against the caps before assuming either rate.

What does each scenario look like side by side?

The five scenarios a Bengaluru buyer actually encounters, and what each one pays.

The table also explains a pattern in Bengaluru listings: the same project quoting two prices for near-identical units, one for towers awaiting certification and one for the certified phase. The gap is partly the GST line and partly the certainty premium, and decomposing it tells you what you are really paying for.

Remember that GST is charged on top of the agreement value and sits alongside, not instead of, stamp duty and registration. An 80 lakh rupee under-construction flat in Bengaluru carries 4 lakh rupees of GST plus the stamp duty stack we detailed in our Bengaluru stamp duty guide, and the two together routinely add more than 10 percent to the sticker price.

Why is the occupancy certificate the hinge, and how do you verify it?

The tax boundary is not marketing language like ready possession or nearing completion; it is the certificate. A flat sold before the occupancy or completion certificate is issued is a construction service and attracts GST; a flat sold after is not. Razorpay's guide states the requirement plainly: the exemption needs a valid occupancy certificate, and a building with pending certification can still be treated as under construction whatever the sales office says. We explained the difference between the two certificates, who issues them in Bengaluru and how to check, in our guide to occupancy versus completion certificates. For GST purposes the practical rule is: ask for the certificate, read the date, and understand that instalments you pay before certification carry tax that instalments after it may not, a timing detail worth confirming with a chartered accountant on payment plans that straddle the certificate date.

Two Bengaluru-specific wrinkles deserve attention. First, projects on the city's periphery sometimes sit just outside what the GST definition treats as the metro for the carpet-area gate, and developers occasionally market the 90 square metre limb to buyers it does not apply to; the safe assumption for anything that calls itself Bengaluru is the 60 square metre metro cap, verified in writing with the developer's tax workings. Second, in joint development projects, where a landowner's share of flats is sold alongside the developer's share, the GST treatment of the two streams can differ in mechanics even when the buyer-facing rate is the same. If you are buying a landowner-share unit, ask specifically who invoices you for GST, at what rate, and how it appears in your demand letters, because a mismatch there surfaces years later during khata and certificate paperwork when nobody at the original table is answering calls.

Does the buyer get any input tax credit?

No, and the without-ITC design explains some pricing behaviour. Under the current scheme the 1 and 5 percent rates come without input tax credit at the sale leg, so the developer's own taxes on cement, steel and services accumulate as cost. When input costs fall, as they did when GST rates on key construction materials were cut, developers' costs ease, but nothing in the law forces that saving into your price; it arrives, if at all, through competition. The negotiating insight is simple: GST on your instalments is a statutory pass-through you cannot negotiate, but the base price absolutely is negotiable, and a developer whose input costs have fallen has room you are entitled to push against.

So should you buy under construction or ready?

Worked honestly, the comparison is closer than the tax line suggests. Suppose the under-construction flat is priced at 80 lakh rupees and the equivalent ready unit at 88 lakh rupees. The construction buyer pays 4 lakh rupees of GST but staggers payments over three years and enters at a lower base; the ready buyer pays zero GST but funds the full amount now at a premium. Add two years of rent for the construction buyer and the interest profiles of both loans, and either side can win depending on rent levels, delay risk and how the project actually progresses.

The 4 lakh rupee GST gap on an 80 lakh rupee flat is real, but it is one column in a longer ledger, and honesty requires the whole ledger. Under-construction purchases offer construction-linked payment plans, typically lower entry prices, and first pick of units, against construction risk, delay risk and rent paid while you wait, with RERA's protections as the backstop. Ready flats cost more per square foot, demand the full stack immediately, and offer certainty you can walk through, with no GST. A useful way to frame it: the GST saving on ready property is the market's compensation for the premium you pay for certainty. Run both totals, all taxes, all interest, rent during construction, and compare finished numbers rather than instincts. Our guide to the agreement-to-deed sequence covers the contractual side of the under-construction route.

What should a buyer verify before signing?

1. Establish the project's certificate status in writing: occupancy or completion certificate issued, applied for, or distant, with dates.
2. If under construction, confirm which rate applies by testing both the price cap and the carpet area cap for affordable housing, not just one.
3. Recompute the full acquisition cost: agreement value, GST at the applicable rate, stamp duty, registration, and deposits, in one spreadsheet.
4. Check that GST is shown separately on every demand note and receipt, at the correct rate, rather than folded invisibly into charges.
5. For payment plans straddling the certificate date, take professional advice on which instalments carry tax before you sign the schedule.
6. On a ready purchase, verify the occupancy certificate yourself rather than accepting ready-to-move marketing as a tax position.
7. Negotiate the base price knowing input costs: the statutory GST is fixed, the developer's price is not.

What is the GST on an under-construction flat in 2026?

One percent without input tax credit if the flat qualifies as affordable housing, meaning a price up to 45 lakh rupees and carpet area up to 60 square metres in metros like Bengaluru, and 5 percent without input tax credit for all other under-construction homes.

Is there GST on a ready-to-move flat?

No. A flat sold after the occupancy or completion certificate is issued is a completed good outside GST. The certificate, not the marketing phrase ready-to-move, is what matters, so verify the document and its date before treating a purchase as GST-free.

Do resale flats or plots attract GST?

No. Resale of a completed flat by an individual is not a supply of construction services, and the sale of developable land or plain plots is outside GST. Your costs on those purchases are stamp duty, registration and the other transaction charges, not GST.

Can I claim input tax credit on the GST I pay for my flat?

No. The current 1 percent and 5 percent rates on under-construction homes are charged without input tax credit for the buyer. The amount is a final cost, which is why it belongs in your acquisition budget alongside stamp duty rather than being treated as recoverable.

Last updated 2026-06-12. PropNewz Team.