Ready Flat After the Occupancy Certificate: When GST Still Applies, and Why Payment Dates Matter

A Bengaluru builder has a few unsold flats in a tower that received its occupancy certificate last year. The sales team tells a buyer there is no GST on these units because the building is complete. A friend who bought in the same tower two years ago, while it was under construction, paid 5 per cent. Both statements can be true, but the reason is narrower than "complete buildings are tax-free". A Maharashtra advance ruling dated 30 March 2026 spells out the test, and it points to two earlier Karnataka rulings along the way.

The ruling is Order No. GST-ARA-42/2021-22/B-54 for M/s Vedant Construction, a Thane developer, listed on the GST Council's advance ruling register. It concerned flats handed over after the occupancy certificate under a state inclusive housing rule, but its reasoning on when a post-completion sale escapes GST is general. This guide reads that reasoning for a Bengaluru buyer of a ready flat. It is buyer guidance, not tax advice, and an advance ruling binds only the applicant and its officers.

The short answer. The Maharashtra authority explained that construction of a building for sale is a supply of service under paragraph 5(b) of Schedule II of the CGST Act, and that the exception to it requires that the entire consideration be received after the completion or occupancy certificate. It held that where any part of the consideration, even a non-monetary one such as additional FSI, was received before completion, the condition is not met and the sale remains taxable. It noted that two Karnataka rulings cited by the tax officer, B.R. Sridhar dated 7 November 2020 and Bindu Ventures, held that sales after the occupancy certificate are not taxable on facts of a simple post-completion sale with no pre-completion consideration. The trade-off: a ready flat can be outside GST if every rupee is paid after the certificate, but any booking amount paid earlier can change that.

Is there GST on a flat bought after the occupancy certificate?

It depends on when you paid. The Maharashtra ruling says the premise of the applicant's case rested on the exception to paragraph 5(b) of Schedule II, and that the condition for the exception is that the entire consideration be received after the completion or occupancy certificate. Where a component of the consideration is received at the commencement stage, it said, that condition is, on any fair reading, not satisfied, and the transaction remains within paragraph 5(b) and is taxable as a supply of service.

For a buyer, the practical test is your payment timeline. If you book a flat in a building that already has its certificate and pay the entire price after that date, the exception the ruling describes is in play. If you paid a booking amount before the certificate was issued, the ruling's reasoning suggests the exception may not apply.

What did the Karnataka rulings say?

That simple post-completion sales are not taxable. The Maharashtra ruling records that the jurisdictional officer cited rulings in B.R. Sridhar, Karnataka, dated 7 November 2020, and Bindu Ventures, Karnataka, in support of the contention that sales after the occupancy certificate are not taxable. It said those rulings, as represented in the officer's comments, proceeded on facts where the transaction was a simple post-completion sale of a building, with no pre-existing obligation to construct that flat for a specific purpose and no pre-completion consideration in any form.

The Maharashtra authority distinguished them on its own facts and noted that they were not binding on it. For a Bengaluru buyer, the useful point is the description of what those Karnataka rulings were about: a sale where nothing was promised or paid before completion.

Why did the Maharashtra flats remain taxable?

Because part of the consideration came at the start. Under a 2013 Maharashtra government resolution, the applicant had to reserve at least 20 per cent of the net plot area or constructed tenements for economically weaker section and lower income group beneficiaries identified by MHADA, and in return received additional FSI from the local authority. The ruling found that the consideration had two linked limbs: the non-monetary additional FSI of 872.15 square metres, received at the plan approval and commencement certificate stage, and the money paid by the allottees at prescribed rates after the occupancy certificate. It held that the proposition that no consideration was received before the occupancy certificate was factually untenable, since the more valuable limb, the FSI, was received at the very inception of the project.

The ruling's final order said the supply of 19 such flats to allottees in the project at Kalwa, Thane, is a taxable supply of works contract service under Section 2(119) read with paragraph 5(b) of Schedule II, and is not excluded by paragraph 5 of Schedule III. It also held that the value should be the open market value, being the price of comparable flats sold to other buyers in the same project.

What counts as consideration for this test?

More than money. The ruling quotes the definition of consideration in Section 2(31) of the CGST Act, which covers any payment made or to be made, whether in money or otherwise, for the supply, whether by the recipient or by any other person, and the monetary value of any act or forbearance in respect of or for the inducement of the supply. The definition's proviso says a deposit given in respect of a supply is not considered payment unless the supplier applies it as consideration. The authority said the definition is deliberately wide, highlighting that consideration need not be in money, that the monetary value of an act or forbearance qualifies, and that it may come from someone other than the direct recipient.

For a ready-flat buyer, the deposit proviso is worth noting. A refundable deposit held by a builder is not, by that definition alone, payment, unless the builder applies it as consideration. Ask whether any amount you pay before the certificate will be treated as a deposit or as part of the price.

How did the ruling value the taxable flats?

At open market value. The ruling held that the value of supply of the inclusive housing flats is to be determined under Rule 27(a) of the CGST Rules as the open market value, being the price at which comparable flats are sold by the applicant to other buyers in the same project on an arm's length basis, suitably adjusted for attributes such as size, floor, orientation and amenities. It said the prescribed sale price for those allottees is not the open market value, and it rejected an argument that the difference was a subsidy excludable from value, because the additional FSI came from a local authority and not from the Central or a State government.

Does signing the sale deed after completion change anything?

Not on its own. The ruling said the applicant's reliance on the date of execution of the sale agreements with allottees was misplaced. It described the post-completion sale deed as the final documentation of a transaction whose legal character was fixed long before, and said Section 7(1A) and the objective of the GST Act direct that the substance of a transaction prevail over its form. It also rejected the argument that, because construction was complete, with an occupancy certificate of 31 December 2020, before the allottees were identified by lottery on 2 September 2021, no works contract service was rendered, describing it as a misconception of when a works contract supply arises.

For a buyer, that means the date on the sale deed is not the whole story. What matters under the reasoning is whether any consideration, in any form, was received before the certificate.

What should a Bengaluru buyer of a ready flat ask?

Ask for dates and payments. Get a copy of the occupancy or completion certificate and note its date. Ask whether any amount for your specific flat was received by the builder before that date, including from an earlier buyer who later cancelled. Ask the builder in writing whether GST will be charged and on what basis. If the builder says no GST applies, ask it to confirm that the entire consideration for your flat is being received after the certificate. Our guide to commencement, completion and occupancy certificates explains what each document shows, and our guide to GST rates on under-construction flats covers what you would pay if GST does apply.

A seven-point checklist before buying a ready flat

1. Get a copy of the occupancy or completion certificate and note its date.
2. Ask whether any payment for your flat was received before that date.
3. Pay no booking amount until you are clear on how GST will be treated.
4. Ask the builder for its GST position in writing, with the basis.
5. If no GST is charged, ask it to confirm the entire consideration comes after the certificate.
6. Check the cost sheet for any GST line on parking, amenities or other charges.
7. Keep receipts with dates for every payment you make.

Frequently asked questions

Is GST payable on a ready flat bought after the occupancy certificate?

A March 2026 Maharashtra advance ruling explained that the exception from GST under paragraph 5(b) of Schedule II requires the entire consideration to be received after the completion or occupancy certificate. If any part of the consideration was received earlier, it held, the condition is not met and the sale stays taxable.

What did Karnataka rulings say about sales after completion?

The Maharashtra ruling records that rulings in B.R. Sridhar, Karnataka, dated 7 November 2020, and Bindu Ventures, Karnataka, held sales after the occupancy certificate not taxable, on facts of a simple post-completion sale with no pre-existing obligation and no pre-completion consideration in any form.

Does a booking amount paid before completion matter?

On the Maharashtra ruling's reasoning, yes. It held that where a component of the consideration is received before completion, the condition that the entire consideration be received after the completion or occupancy certificate is not satisfied, and the transaction remains a taxable supply of service.

If the sale deed is signed after completion, is the flat outside GST?

Not necessarily. The Maharashtra ruling said the date of the sale deed is the final documentation of a transaction whose character may have been fixed earlier, and that under Section 7(1A) of the CGST Act the substance of a transaction prevails over its form.

Last updated 2026-11-05. PropNewz Team.