GST on Buying a Flat in Hyderabad: Under Construction, Affordable and Ready to Move

A buyer comparing two similar three bedroom flats in Kokapet once asked us why one quote was noticeably higher than the other, even though the base prices matched. The answer was a single line on the cost sheet: one flat was under construction and carried Goods and Services Tax, while the other was ready to move with its completion certificate in hand and carried none. That one difference can move the final number by lakhs of rupees, yet it is the part of a Hyderabad purchase that buyers understand least. This guide sets out exactly when GST applies, at what rate, and when it does not, so you can read a builder cost sheet without guessing.

The short answer. In Hyderabad, an under construction home attracts GST at 5 percent without input tax credit, or 1 percent without input tax credit if it qualifies as affordable housing, both effective from 1 April 2019. A ready to move home that already has its completion certificate, and a resale flat between two individuals, attract no GST at all. The trade off is real: an under construction flat can cost less up front but adds GST, while a completed flat skips GST but usually carries a higher sticker price.

Does GST apply to my Hyderabad flat at all?

GST applies only while a home is still under construction, not after it is complete. The official GST Council guidance for the real estate sector explains that the new rates apply to the construction of residential apartments, and that a property sold after the completion certificate has been issued falls outside this construction service. So the single most important question for a Hyderabad buyer is not the locality or the builder, it is the stage of the project. If you are buying into a tower that is still being built and does not yet have its completion certificate, expect GST on your payments. If you are buying a finished flat that already has that certificate, or a resale flat from an existing owner, GST does not enter the picture. Everything else in this guide follows from that one distinction. It is also why the timing of your purchase can matter as much as the price, since a project that receives its completion certificate shortly after you were about to buy can change the tax treatment of the very same flat.

What are the GST rates on under construction homes?

The rate is 5 percent for most homes and 1 percent for affordable ones, in both cases without input tax credit. The GST Council guidance states an effective rate, after deduction of the value of land, of 1 percent without input tax credit on total consideration for affordable residential apartments, and 5 percent without input tax credit for residential apartments other than affordable ones, effective from 1 April 2019. The phrase after deduction of the value of land matters, because part of what you pay is for the land under the building, and that share is taken out before the construction service is taxed. For a buyer this is already built into the rate the builder applies, so you will typically see 5 percent, or 1 percent for an affordable unit, applied to your instalments as you pay them. Ask the builder to show the GST line separately on every demand so you can check it.

What counts as affordable housing for the 1 percent rate?

Affordable housing is defined by two limits that must both be met, one on size and one on price. The GST Council guidance defines an affordable residential apartment as one with a carpet area up to 60 square metres in metropolitan cities and up to 90 square metres in other cities or towns, and a gross amount charged by the builder of not more than forty five lakh rupees. Hyderabad is listed as a metropolitan city in the same guidance, so in Hyderabad the size test is 60 square metres of carpet area, roughly a compact two bedroom home, and the price test is 45 lakh rupees. Both conditions apply together: a flat that is small enough but priced above 45 lakh does not qualify, and neither does a cheaper flat that is larger than the carpet area limit. If your unit meets both, the 1 percent rate is a meaningful saving, so it is worth checking the carpet area figure, not the larger super built up number, against the limit.

Why is there no input tax credit, and does the lower rate help me?

The current rates are lower than the old ones but come without input tax credit, which changes how builders price. Under the scheme effective from 1 April 2019, the 1 percent and 5 percent rates apply without input tax credit, meaning the builder cannot set off the GST paid on cement, steel and other inputs against the GST collected from you. Before this change, under construction homes were taxed at higher effective rates but with credit available. For you as a buyer, the practical point is simple: the headline GST you pay is lower now, but because builders can no longer claim input credit, that cost tends to be absorbed into the base price. So do not assume a low GST rate automatically means a cheaper home. Compare the all in figure, base price plus GST, across projects rather than the GST rate alone.

Do I pay GST on a ready to move or resale flat?

No, a completed home with its completion certificate and a resale flat between individuals do not attract GST. The GST Council guidance treats a sale made after the completion certificate has been issued as outside the construction service that GST taxes, which is why a genuinely ready to move flat carries no GST. A resale flat sold by one individual owner to another is likewise not a builder supply of construction service, so no GST applies there either, though stamp duty and registration charges still do. This is the single biggest lever a Hyderabad buyer has over the tax on a purchase. Two flats can be nearly identical, but if one is bought a few months later once the completion certificate is issued, the GST line disappears. Always confirm the completion certificate exists and covers your specific tower before treating a flat as GST free.

How should I plan GST into my Hyderabad budget?

Treat GST as a known, calculable line rather than a surprise at the end. Because the rate is fixed at 5 percent, or 1 percent for an affordable unit, you can work out the GST on an under construction home the moment you know the price and pay it in step with your instalments. Set it alongside your other closing costs, the 1 percent tax at source we cover in our guide to TDS on buying property in Hyderabad, and the state levies in our guide to stamp duty and registration charges in Hyderabad. If you are weighing an under construction option such as Raghava Nova in Nanakramguda against a ready flat, put both on a single sheet with GST included on the under construction side, so the comparison is honest. And always check the affordable limits on carpet area and price on the official record before assuming the 1 percent rate.

The Hyderabad buyer's GST checklist

Work through these seven checks before you sign a cost sheet.

1. Confirm whether the flat is under construction or already has its completion certificate.
2. For an under construction flat, ask which rate applies, 5 percent or the affordable 1 percent.
3. Check the carpet area against the 60 square metre metropolitan limit for affordable status.
4. Check the gross price against the 45 lakh rupee affordable limit as well.
5. Ask the builder to show the GST amount as a separate line on every demand letter.
6. Remember input tax credit is not available, so compare base price plus GST across projects.
7. For a ready or resale flat, confirm the completion certificate before treating it as GST free.

How GST treats different Hyderabad homes

GST is one of the few costs in a Hyderabad purchase you can predict to the rupee once you know the price and the project stage. Read it as a line item, confirm the stage, and it stops being the mystery on the cost sheet.

Frequently asked questions

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

No. The GST Council guidance treats a home sold after its completion certificate has been issued as outside the construction service that GST taxes, so a genuinely ready to move flat carries no GST. You will still pay stamp duty and registration charges, but not GST, provided the completion certificate covers the specific tower you are buying into.

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

It is 5 percent without input tax credit for most homes, and 1 percent without input tax credit for affordable ones, both effective from 1 April 2019 and applied after the value of land is deducted. The rate is charged on your instalments as you pay them, so ask the builder to show it as a separate line.

What makes a flat affordable for the 1 percent GST rate?

Two conditions must both be met. In a metropolitan city like Hyderabad the carpet area must be up to 60 square metres, and the gross amount charged by the builder must not exceed 45 lakh rupees. A flat that fails either test, on size or on price, is taxed at 5 percent rather than the affordable 1 percent.

Does GST apply to a resale flat between two individuals?

No. A resale flat sold by one individual owner to another is not a builder's supply of construction service, so GST does not apply to that sale. Stamp duty, registration charges and, above the threshold, the 1 percent tax at source can still apply, so budget for those even though the resale itself carries no GST.

Last updated 2026-09-22. PropNewz Team.