GST on Under-Construction Flats in 2026: 1% vs 5% (Complete Guide)

Written by the advisory desk at Being Real Estate, the team that has walked 2,400+ families from first shortlist to final registration across Mumbai, Thane and Navi Mumbai. Reading time: about 40 minutes. This is our complete, plain-English guide to GST on under-construction flats in 2026: when the 1% rate applies, when it is 5%, why a ready-to-move flat carries no GST at all, and exactly how much the tax adds to your purchase. It is the companion to our guide to stamp duty and registration and our guide to payment plans.

Of all the costs in a home purchase, GST is the one that produces the most contradictory advice. One agent says “GST is 5%”, another says “1%”, a third says “there’s no GST on this flat at all”, and they can all be right, because the rate depends entirely on what kind of flat you are buying and whether it is finished. The confusion is expensive: on a ₹1 crore under-construction flat, the difference between the 1% and 5% rate is ₹4 lakh.

The good news is that the rules, once laid out, are simple and stable. They have not changed since April 2019: 1% for affordable homes, 5% for other under-construction homes, and zero for ready-to-move and resale flats. What trips buyers up is not the rates themselves but knowing which one applies to their specific flat, and how GST stacks on top of stamp duty to form the full tax on a new home.

This guide settles it. By the end you will know the exact GST rate for your flat, the precise definition of “affordable” that unlocks the 1% rate, why a completion certificate switches GST off entirely, and how to budget GST alongside stamp duty so the all-in cost holds no surprises. There is an interactive calculator so you can see your own number.

1. Why GST is the most confusing line on a cost sheet

Direct answer: GST confuses buyers because its rate is not fixed, it depends on whether the flat is under-construction or ready, and whether it qualifies as affordable. The same buyer can be quoted 1%, 5% or 0% by three different people, and all three can be correct for three different flats. Once you know that GST applies only to under-construction homes, at 1% for affordable and 5% for others, and not at all to ready or resale flats, the confusion disappears.

Most cost confusion in real estate comes from a number that means different things in different contexts, and GST is the clearest example. The rate is genuinely variable, so a blanket statement like “GST on flats is 5%” is only sometimes true. The skill is matching your specific flat to the right rate.

The three things that decide your GST

Your GST rate is determined by three questions: Is the flat under construction or ready (has it received its completion or occupancy certificate)? Is it residential or commercial? And, if residential and under construction, does it meet the affordable-housing definition? Answer those three and your rate is fixed, there is no further ambiguity.

2. What is GST on property, and when does it apply?

Direct answer: GST (Goods and Services Tax) is a central indirect tax that applies to the sale of under-construction property, because it is treated as a supply of construction services. It does not apply to the sale of completed (ready-to-move) property or to resale flats, which are treated as transfers of immovable property rather than a supply of service. So GST is a tax on buying a home that is still being built, not on buying one that is finished.

Understanding why GST applies to some flats and not others makes the rest of the guide intuitive. The distinction is not arbitrary; it follows from what GST taxes.

Construction is a service; a finished home is not

GST taxes the supply of goods and services. When you buy an under-construction flat, you are, in legal terms, paying a developer to build and deliver a home, that is a supply of construction services, and GST applies. When you buy a ready, completed flat, you are buying immovable property that already exists; there is no ongoing service being supplied, so GST does not apply. The completion certificate is the moment a “service” becomes a “finished property”.

3. The 2026 GST rates at a glance: 1%, 5% and 0%

Direct answer: In 2026, GST on residential property is 1% for affordable under-construction homes and 5% for other under-construction homes, both without input tax credit. Ready-to-move and resale flats attract 0% GST. Commercial under-construction property attracts 12% (with input tax credit). These rates have applied to new projects since 1 April 2019 and are charged on the value after a one-third deduction for land.

Here is the entire rate structure in one place. Memorise this table and you have the core of GST on property.

4. The 1% rate: GST on affordable housing

Direct answer: Under-construction homes that qualify as “affordable housing” attract GST at just 1%, without input tax credit. This is a deliberate concession to make entry-level homes cheaper. To qualify, a flat must meet both a size limit and a price limit, carpet area up to 60 sq m in metro cities (90 sq m in non-metros) and a value up to ₹45 lakh. Meeting only one of the two is not enough; both conditions must hold.

The 1% rate is a meaningful saving, four percentage points lower than the standard 5%, so on a qualifying ₹45 lakh flat it is the difference between ₹45,000 and ₹2.25 lakh of GST. For the value-belt buyer, it is one of the most useful concessions in the system.

Who benefits

The 1% rate is aimed squarely at affordable and entry-level housing, the kind of compact 1 and 2 BHK homes common in the Kalyan, Dombivli, Ambernath, Badlapur and Karjat belts, and in similar peripheral markets around other cities. A first-time buyer purchasing a modest under-construction flat within both limits pays a fraction of the GST that a larger or pricier flat would attract.

5. The affordable definition: ₹45 lakh and 60 sq m

Direct answer: For GST, a home is “affordable” if its carpet area is up to 60 square metres (about 645 sq ft) in metropolitan cities, or up to 90 square metres (about 969 sq ft) in non-metros, and its total value does not exceed ₹45 lakh, in both metros and non-metros. The metro cities for this purpose include the Mumbai Metropolitan Region, Delhi-NCR, Bengaluru, Chennai, Hyderabad and Kolkata. Both the area and the ₹45 lakh price condition must be satisfied.

This definition is precise and worth getting exactly right, because it is the gateway to the 1% rate. The two limits work differently: the area limit changes between metro and non-metro, while the ₹45 lakh price cap is the same everywhere.

The two limits

Why so few Mumbai flats qualify

In central Mumbai, very little under-construction stock is priced at or below ₹45 lakh, so the 1% rate is rarely available there. It is far more relevant in the affordable belts of the MMR, Kalyan, Dombivli, Ambernath, Badlapur, Karjat, Panvel’s outer pockets, where compact homes within both limits genuinely exist. Knowing the definition tells you, instantly, whether a given project can offer you the 1% rate.

6. The 5% rate: other under-construction homes

Direct answer: Any under-construction residential flat that does not meet the affordable-housing definition is taxed at 5% GST, without input tax credit. This is the standard rate for the bulk of new homes, anything above ₹45 lakh, or above the carpet-area limit, falls here. It is charged on the agreement value after the one-third land deduction, and the builder cannot pass on input tax credit, so the 5% is a clean addition to your cost.

For most buyers of new flats in Mumbai and the better parts of the MMR, 5% is the rate that applies, because their flats exceed the ₹45 lakh affordable threshold. It is the GST figure to budget by default unless your flat specifically qualifies as affordable.

What the 5% applies to

The 5% rate covers all under-construction residential property outside the affordable bracket: mid-segment and premium flats, larger homes, and anything priced above ₹45 lakh. It is a flat rate regardless of how far above the affordable threshold the flat sits, a ₹60 lakh flat and a ₹6 crore flat are both taxed at 5% if under construction.

7. Ready-to-move and resale: why GST is zero

Direct answer: Ready-to-move flats that have received their completion or occupancy certificate, and all resale flats, carry no GST at all, 0%. This is because GST taxes the supply of construction services, and a completed home or a resale involves no such service; it is simply a transfer of existing immovable property. So buying a ready or resale flat means you pay stamp duty and registration, but no GST, regardless of the flat’s price.

This is one of the most powerful, and most overlooked, facts in home buying. A ready flat’s freedom from GST can offset a good part of its typically higher price relative to an under-construction option.

Why “ready” means no GST

Once a project has its completion or occupancy certificate, the developer is no longer supplying a construction service to you; the home is finished. A sale at that point is the transfer of a completed building, which is outside the scope of GST. The same logic applies even more clearly to resale: a flat changing hands between two owners has no construction element at all, so no GST arises.

8. The occupancy certificate: the line that switches GST off

Direct answer: The occupancy certificate (or completion certificate) is the official document confirming that a building is complete and fit for occupation. It is the precise line that switches GST off: a flat sold after this certificate is issued carries no GST, while one sold before it, with any payment due before completion, attracts GST. So the certificate is not just a legal formality; it is the dividing line between a 5% (or 1%) tax and zero.

Because the certificate has such a direct effect on your cost, it is worth understanding what it is and confirming its status for any “ready” flat you are told carries no GST.

What the certificate does

The occupancy certificate is issued by the local municipal authority once a building meets the approved plans and safety norms and is ready for people to live in. For GST, the key consequence is timing: if the entire consideration is paid after the certificate is issued, the sale is outside GST. If any part of the payment falls due before completion, it is a supply of construction services and GST applies.

“Ignore any suggestion that you can claim the GST back on a home — you cannot. The current rates are designed to be simple and final, so budget the 1% or 5% as a real cost.”On why there is nothing to reclaim

9. Why there is no input tax credit any more

Direct answer: Under the GST regime that took effect on 1 April 2019, the 1% and 5% residential rates come without input tax credit (ITC), the developer cannot offset the GST it pays on materials and services against the GST it collects from you. This was the trade-off for the lower headline rates (down from 8% and 12% earlier, which did allow ITC). For you as a buyer, it simply means the rate you see is the rate you pay, with no credit mechanism to track.

ITC sounds technical, but its absence has a practical effect on how prices are formed, and understanding it prevents a common misconception that buyers can somehow claim GST back.

What changed and why

Before April 2019, under-construction homes were taxed at higher effective rates (around 8% for affordable and 12% for others) but developers could claim input tax credit on their construction inputs, in principle passing some of that benefit to buyers. From April 2019, the government cut the rates sharply to 1% and 5% but removed ITC. The net cost to buyers became simpler and, for most, lower, but the credit chain was closed.

10. Old regime vs new regime: how rates changed in 2019

Direct answer: Before 1 April 2019, under-construction homes were taxed at higher effective GST rates, around 8% for affordable and 12% for other homes, but developers could claim input tax credit. From 1 April 2019, the government cut the rates to 1% (affordable) and 5% (other) but removed input tax credit. For new projects, only the new lower rates apply; the old rates are now only of historical relevance and for a handful of long-running transition-era projects.

You may still encounter references to “12% GST on flats” in older articles or advice. That figure belongs to the pre-2019 regime. For any flat you buy today, the relevant numbers are 1% and 5%, so it helps to know why the change happened.

What the 2019 reform did

The reform simplified the buyer’s side dramatically. By cutting headline rates and removing input tax credit, the government replaced a complex system, where the real cost depended on how much credit a developer passed on, with a clean, flat rate that buyers could understand and budget. For most home buyers, the effective tax fell, and, just as importantly, it became predictable.

11. The one-third land deduction, explained

Direct answer: GST is a tax on goods and services, not on land, so the law deems one-third of a property’s value to be the land component and excludes it from GST. The tax is effectively levied on the remaining two-thirds (the construction component). The 1% and 5% rates you are quoted are the effective rates on the total agreement value after this one-third deduction is built in, so you do not need to do the maths yourself; the headline rate already accounts for it.

This is a behind-the-scenes mechanism that occasionally confuses buyers who try to reconcile the numbers. The key reassurance: the 1% and 5% are already the all-in effective rates on your full agreement value.

How it works

Because land cannot be taxed under GST, the rules assume one-third of any property’s value represents land and tax only the other two-thirds. The notional rates on the construction portion are higher (1.5% for affordable and 7.5% for others), but once the one-third land deduction is applied, the effective rate on the total consideration comes out to the familiar 1% and 5%. In practice, you simply apply 1% or 5% to your agreement value.

12. The GST calculator

Direct answer: Your GST is simply the applicable rate (1% affordable, 5% other under-construction, 0% ready or resale, 12% commercial) applied to the agreement value. Use the calculator below: set your value and pick the property type, and it returns your GST amount and the all-in cost including GST. Remember GST is separate from, and on top of, stamp duty and registration, which we combine in the next chapters.

Move the value and switch the property type to see, instantly, how much GST a given flat carries, and how a ready, zero-GST flat compares with an under-construction one.

How to read the result

The headline figure is the GST you pay on the flat, a real, non-recoverable cost on an under-construction home, and zero on a ready or resale one. Notice how dramatically the property type changes the number: the same ₹75 lakh value carries ₹3.75 lakh of GST at 5%, ₹75,000 at 1%, and nothing at all if the flat is ready. That swing is exactly why the under-construction-versus-ready choice deserves a proper all-in comparison.

13. Worked example: under-construction vs ready

Direct answer: Consider two similar flats: an under-construction one at ₹80 lakh and a ready, occupancy-certificate one at ₹84 lakh. The under-construction flat adds 5% GST (₹4 lakh), so its all-in cost before stamp duty is ₹84 lakh, exactly level with the ready flat that carries no GST. The ready flat’s higher sticker is entirely offset by the GST you avoid, plus it carries no construction risk and no waiting.

This is the comparison GST exists to inform, and it surprises buyers who judge on sticker price alone. Here it is line by line.

On these numbers the two flats cost the same all-in, but the ready flat gives you immediate possession, no construction risk, and an end to paying rent while you wait. The under-construction flat, in turn, may offer a longer, staggered payment runway and an earlier-stage price. Neither is universally better; the point is that GST makes them genuinely comparable, where the sticker prices suggested the ready flat was ₹4 lakh dearer.

“A ₹1 crore under-construction flat is really ₹1.11 crore all-in; a ready one at the same price is ₹1.06 crore. Budget to the all-in, and pick the home on its merits.”On the full tax on a new home

14. GST plus stamp duty: your full tax on a new home

Direct answer: On an under-construction home, you pay both GST (central) and stamp duty plus registration (state). For a ₹1 crore under-construction flat in Mumbai, that is 5% GST (₹5 lakh) plus 6% stamp duty (₹6 lakh) plus ₹30,000 registration, about ₹11.3 lakh of tax and charges in total, roughly 11.3% on top of the price. A ready flat at the same price avoids the GST, leaving only the stamp duty and registration.

GST and stamp duty are different taxes by different governments, but to you they are simply two lines on the same purchase. Seeing them together is the only way to know the true tax burden of a new home.

The combined picture

15. GST on commercial property

Direct answer: Under-construction commercial property, shops, offices and similar, attracts GST at 12%, and unlike residential property, input tax credit is available. A registered business buyer can therefore often claim credit for this GST against its own output tax, which softens the effective cost. Ready (completion-certificate) commercial property, like ready residential, attracts no GST. So commercial GST is higher in rate but, for a GST-registered buyer, partly recoverable.

Commercial property follows a different GST logic from residential, so investors and business buyers should treat it separately. The headline 12% looks steep next to residential’s 5%, but the credit mechanism changes the real cost for many buyers.

Rate and credit

Under-construction commercial units are taxed at 12% GST, with input tax credit available. A business that is registered under GST and uses the property for its taxable activity can generally claim that GST as credit, reducing the effective burden. A buyer who cannot claim credit (for instance, a pure individual investor with no GST registration) bears the 12% as a real cost. As always, a ready commercial unit with its completion certificate carries no GST.

16. GST on plots, land and resale

Direct answer: The sale of land or a plot does not attract GST, because land is outside the scope of GST. Resale flats also carry no GST, as they involve no construction service. The one nuance is a plot sold with a construction or development agreement: the land portion remains GST-free, but any construction service component can attract GST. Pure land, and pure resale, are GST-free.

Buyers of plots and resale homes often ask whether GST applies; the clean answer for the common cases is no. Knowing the exceptions keeps you accurate where deals are structured unusually.

The clear cases and the nuance

17. GST on parking, PLC, clubhouse and other charges

Direct answer: When charges like preferential location (PLC), covered parking, club membership and infrastructure are bundled into the purchase of an under-construction flat, they are generally treated as part of the same composite supply and taxed at the same GST rate as the flat (1% or 5%). Society maintenance charges are different: they attract 18% GST only if the monthly contribution exceeds ₹7,500 per member and the society’s annual turnover exceeds ₹20 lakh.

The various add-on charges on a cost sheet can each raise a GST question. The general principle is that what is bundled with the under-construction flat follows the flat’s rate; recurring society charges are a separate matter.

Bundled charges follow the flat

Preferential location charges, floor-rise, covered parking, club and infrastructure charges that form part of the consideration for an under-construction flat are usually taxed at the flat’s GST rate, because they are part of one composite supply of construction services. So on a 5% flat, these bundled extras typically also bear 5%, not a separate higher rate.

18. GST on a new flat in Mumbai and the MMR

Direct answer: In Mumbai and most of the MMR, the great majority of under-construction flats are taxed at 5% GST, because they are priced above the ₹45 lakh affordable threshold. The 1% rate is mainly available in the affordable belts, Kalyan, Dombivli, Ambernath, Badlapur, Karjat and similar, where compact homes within both limits genuinely exist. Ready, occupancy-certificate flats anywhere in the MMR carry no GST.

The national rules play out locally in a predictable way. Knowing the MMR pattern tells you, for most flats, what to expect before you even check the specifics.

The MMR pattern

Central Mumbai and the better suburbs have very little under-construction stock at or below ₹45 lakh, so the 5% rate dominates there. Move out to the affordable corridors of the MMR and genuine 1% stock appears, compact under-construction homes within the size and price limits. Across all of these, any flat that has received its completion or occupancy certificate is GST-free, which is why ready resale stock in older buildings carries no GST at all.

19. How GST appears on your cost sheet

Direct answer: On an under-construction purchase, GST is charged on each payment as it falls due along the construction-linked schedule, and it appears as a separate line on every demand letter, calculated at 1% or 5% of that instalment. The developer must be registered under GST, must charge it on a proper tax invoice showing its GSTIN, and must deposit it with the government. You should see GST itemised, not buried in the base price.

Knowing how GST shows up on paper helps you check that you are being charged correctly, and that what you pay is genuinely the tax and not an inflated figure.

What to look for

Because under-construction payments are usually staggered (linked to construction milestones or a schedule), GST is applied to each demand as it is raised, at your flat’s rate. Each demand letter should show the instalment, the GST on it, and the total. The developer’s tax invoice should carry its GST registration number (GSTIN). Add up the GST across all demands and it should equal 1% or 5% of your total agreement value.

20. When you actually pay GST

Direct answer: On an under-construction flat, you pay GST in instalments as your payments fall due, not all at once. GST is charged on each demand the developer raises along the payment schedule (whether construction-linked or a down-payment plan), at your flat’s 1% or 5% rate. So if you pay 20% on booking, you pay GST on that 20%; as further demands are raised, GST is added to each. By possession, the GST paid totals 1% or 5% of the full value.

This staggering matters for cash-flow planning. Unlike stamp duty, which is a single payment at registration, GST is spread across your payment milestones, which can be gentler on your funds but requires tracking.

How the timing works

Each time the developer raises a demand, on booking, on slab milestones, or per a fixed schedule, GST is applied to that instalment at your rate. In a construction-linked plan, your GST outflow follows construction progress; in a down-payment plan, more of it is paid early. Either way, the cumulative GST equals the rate on your total agreement value by the time the flat is yours.

21. GST on cancellation and refunds

Direct answer: If you cancel an under-construction booking on which you have paid GST, you can in principle get that GST back, but the mechanism depends on timing. The developer can issue a credit note and refund the GST if it is within the period allowed for adjusting it against their tax liability. Outside that window, recovering GST can be harder, so the refund of GST should be addressed explicitly in your cancellation terms.

Cancellations are uncommon but not rare, and GST adds a wrinkle to getting your money back, so it is worth understanding before you book, and certainly before you cancel.

How a GST refund works on cancellation

When a booking is cancelled, the developer can issue a credit note for the amount, including the GST, and adjust that GST against their own output tax, then refund you. This is straightforward within the period the law allows for such adjustments. If the cancellation comes much later, the developer may have limited ability to reclaim the GST, which can complicate your refund. The practical protection is to agree the treatment of GST on cancellation upfront.

22. Common GST mistakes buyers make

Direct answer: The most common GST mistakes are: assuming every flat carries GST (ready and resale flats do not); paying GST on a resale or completion-certificate flat where none is due; using the outdated 12% figure from before 2019; assuming a low price automatically gives the 1% rate (it needs both the size and price conditions); forgetting to budget GST on top of stamp duty; and believing GST can be claimed back (it cannot, on residential). Each is avoidable with the rules in this guide.

Almost every GST error comes from applying the wrong rule to the wrong flat. Check yourself against this list before you pay.

“The loan handles the price; you handle GST and duty. Seeing all of it together is what keeps an under-construction purchase comfortable rather than cash-tight.”On planning the real cash need

23. GST, your home loan and your budget

Direct answer: Like stamp duty, GST is generally not financed by your home loan, banks lend against the property’s cost, not the GST on it, so you pay GST from your own funds as the demands fall due. Budget GST as part of your upfront and milestone cash needs, alongside the down payment and stamp duty. On an under-construction flat, your true cash requirement includes the GST at 1% or 5%, spread across the payment schedule.

GST belongs in the same mental category as stamp duty: a real cost you fund yourself, not something the loan absorbs. The difference is that GST is paid in instalments rather than as a single closing cheque.

Folding GST into the cash plan

Your loan finances a percentage of the property cost; the GST, like stamp duty, sits outside it. Because GST is charged per demand, it is spread across your payments rather than due in one lump, which eases the cash-flow strain compared with stamp duty. But it is still your money, so include it, at 1% or 5% of the value, in the total cash you plan to deploy over the purchase.

24. NRIs and GST on Indian property

Direct answer: GST on property applies to NRIs exactly as it does to resident buyers, the tax attaches to the transaction and the property, not to the buyer’s residency. An NRI buying an under-construction flat pays the same 1% or 5% GST as a resident; an NRI buying a ready or resale flat pays no GST. There is no NRI surcharge or different GST rate, just as there is none on stamp duty.

Non-resident buyers sometimes expect different tax treatment, but on GST there is none. The rules are identical, which makes budgeting straightforward.

Same rules, no difference

Whether the buyer is a resident, an NRI or an OCI, the GST on a given flat is the same: 1% for affordable under-construction, 5% for other under-construction, zero for ready and resale. The buyer’s residency does not change the rate, the eligibility for the 1% affordable rate, or the absence of input tax credit on residential property. An NRI’s GST budgeting is therefore identical to a resident’s.

25. The 2026 buyer’s playbook for GST

Direct answer: The GST playbook is: first establish whether the flat is under-construction or ready (check for the occupancy/completion certificate); if ready or resale, expect zero GST; if under-construction, determine residential or commercial; if residential, test both affordable limits (≤60 sq m carpet and ≤₹45 lakh) to see whether you get 1% or 5%; budget the GST alongside stamp duty as your own cash; verify the developer’s GSTIN and tax invoices; and remember residential GST is final, with no credit or refund.

Reduced to a sequence, GST is simple. Follow these steps for any flat and your rate, and your budget, are settled.

The checklist

26. GST in redevelopment and society flats

Direct answer: When you buy an under-construction flat in a redeveloped building from the developer, you pay the normal 1% or 5% GST like any other under-construction purchase. Existing society members receiving a rehabilitated flat in exchange for their old one fall under a separate, developer-side GST treatment on the construction service. A simple resale of a flat in an existing society, between two owners, carries no GST at all.

Redevelopment is common in Mumbai, so it is worth knowing how GST applies, both to a new buyer and to existing members, without getting lost in the technicalities.

Buyer, member, and resale

27. Under-construction or ready: letting GST guide the choice

Direct answer: GST should be an explicit factor when you choose between an under-construction and a ready flat, not an afterthought. An under-construction flat adds 1% or 5% GST and carries construction risk and a wait, but often a lower entry price and a staggered payment runway. A ready flat carries no GST and gives immediate possession, but usually a higher sticker. Compare them on the all-in cost (price plus GST plus stamp duty), and the GST often closes much of the apparent price gap.

The under-construction-versus-ready decision is one of the biggest a buyer makes, and GST quietly tilts it. Making the tax explicit turns a gut comparison into a clear one.

The factors to weigh

Set the two options side by side on more than price: the all-in cost including GST and stamp duty; the possession timeline and the rent you keep paying while you wait for an under-construction flat; the construction and delivery risk; and the payment flexibility an under-construction plan can offer. GST is the single line that most often makes a ready flat as affordable as an under-construction one once everything is counted.

28. GST and government affordable-housing schemes

Direct answer: The 1% GST rate on affordable housing aligns with the government’s broader push to make entry-level homes cheaper, and it can sit alongside affordable-housing schemes such as the Pradhan Mantri Awas Yojana (PMAY). The GST concession (1% instead of 5%) and any housing-scheme benefit (such as an interest subsidy, where currently available) are separate mechanisms, one reduces the tax on the flat, the other can reduce the cost of the loan. Check the current status and eligibility of any scheme, as they change.

For the affordable-segment buyer, the 1% GST rate and government housing schemes can stack to make a home meaningfully cheaper, but they are distinct benefits with their own rules.

Two separate benefits

The 1% GST rate reduces the tax you pay on a qualifying affordable under-construction flat. A scheme like PMAY, when applicable, works on a different lever, typically the cost of borrowing, through an interest subsidy for eligible beneficiaries. They are not the same benefit, and qualifying for one does not automatically mean qualifying for the other; each has its own income, size and value criteria.

29. GST myths, busted

Direct answer: The biggest GST myths are: that every flat carries GST (ready and resale flats do not); that GST is 12% (that is the pre-2019 rate, now 1% or 5% for residential); that buyers can claim GST back (you cannot, on residential); that a cheap flat automatically gets 1% (it needs both affordable limits); that GST applies to resale or land (it does not); and that GST is negotiable (it is a statutory rate). Clearing these removes most GST confusion.

Misinformation about GST is widespread, and it costs money in both directions, paying tax that is not due, or failing to budget for tax that is. Here are the myths that matter, corrected.

The myths and the facts

FAQ: the GST questions buyers actually ask

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

It is 1% for affordable housing and 5% for other residential under-construction flats, both without input tax credit. Ready-to-move and resale flats carry no GST. Commercial under-construction property is taxed at 12% (with input tax credit). These rates have applied to new projects since April 2019.

Is there GST on ready-to-move flats?

No. A flat that has received its completion or occupancy certificate carries no GST, regardless of its price. GST applies only to under-construction property, because it taxes the supply of construction services; a completed home involves no such service.

Is there GST on resale flats?

No. A resale flat is the transfer of an existing, completed home between two owners, with no construction service, so no GST applies. You pay stamp duty and registration on a resale, but not GST.

What qualifies as affordable housing for the 1% GST rate?

A flat qualifies if its carpet area is up to 60 sq m in metro cities (90 sq m in non-metros) and its value is up to ₹45 lakh. Both conditions must be met. Meeting only the price limit or only the size limit is not enough for the 1% rate.

What is the GST on a flat above ₹45 lakh?

An under-construction flat above ₹45 lakh (or above the carpet-area limit) does not qualify as affordable and is taxed at 5% GST, without input tax credit. If it is ready or resale, it carries no GST regardless of price.

Do I pay GST and stamp duty both?

On an under-construction flat, yes, both: GST (central, 1% or 5%) and stamp duty plus registration (state). They are separate taxes by different governments. A ready-to-move or resale flat carries only stamp duty and registration, no GST.

Can a home buyer claim GST input tax credit?

No. Input tax credit is not available to home buyers, and under the current regime it is not available to developers on residential projects either. The 1% and 5% residential rates are final costs with no credit to claim. Commercial property (12%) does allow input tax credit for eligible business buyers.

Is the GST refundable to the buyer?

No, residential GST is not refundable to the buyer in normal circumstances, it is a final cost. The only refund situation is a cancelled booking, where the developer may issue a credit note and return the GST if it is within the period allowed for adjusting it. There is no general GST refund for a completed purchase.

Why do some sources say GST on flats is 12%?

The 12% (and 8% for affordable) figures are from the pre-April 2019 regime, which allowed input tax credit. Since April 2019 the rates for new projects are 1% and 5% without input tax credit. If you read “12% GST” on an ordinary residential flat, it is outdated for current purchases.

Is GST charged on the full flat value or part of it?

GST is charged on the value after a one-third deduction for land, but the 1% and 5% rates you are quoted are the effective rates on the total agreement value after that deduction. In practice you simply apply 1% or 5% to your full agreement value, the land deduction is already built into those numbers.

How much GST will I pay on a ₹1 crore under-construction flat?

At the 5% rate (the usual case above ₹45 lakh), GST on a ₹1 crore under-construction flat is ₹5 lakh. If it somehow qualified as affordable (it would not at this price), it would be ₹1 lakh. A ready ₹1 crore flat carries no GST.

Does GST apply to the parking or PLC charges?

When parking, preferential location (PLC), floor-rise and club charges are bundled into an under-construction flat purchase, they are generally taxed at the same rate as the flat (1% or 5%), as part of one composite supply. They should not attract a separate, higher GST rate when bundled with the flat.

Is there GST on society maintenance charges?

Society maintenance attracts 18% GST only if the monthly contribution exceeds ₹7,500 per member and the society’s annual turnover exceeds ₹20 lakh. Below either threshold, no GST applies to maintenance. This is separate from the one-time GST on buying the flat.

Is there GST on buying a plot or land?

No. The sale of land or a plot is outside the scope of GST. You pay stamp duty on a plot purchase, but not GST. The exception is a plot bundled with a construction agreement, where the construction service portion can attract GST while the land remains GST-free.

What is the GST on commercial property?

Under-construction commercial property is taxed at 12% GST, with input tax credit available. A GST-registered business buyer can often claim that credit, reducing the effective cost. Ready commercial property, with its completion certificate, carries no GST, like ready residential.

When do I pay the GST on an under-construction flat?

You pay GST in instalments, as each payment demand falls due along your schedule, not all at once. GST is added to each demand at your 1% or 5% rate. By possession, the total GST equals the rate on your full agreement value.

Is GST included in the price the builder quotes?

Usually the quoted base price is exclusive of GST, and GST is added on top, shown as a separate line on the cost sheet and each demand. Always confirm whether a quoted figure is inclusive or exclusive of GST, so you know the true all-in cost.

Can the GST be added to my home loan?

Generally no. Like stamp duty, GST is not financed by the home loan; you pay it from your own funds as the demands fall due. Budget GST as part of your cash requirement, spread across the payment schedule, on top of the down payment.

Do NRIs pay a different GST rate?

No. GST applies to NRIs exactly as to residents, the same 1% or 5% on under-construction flats, and zero on ready or resale. GST follows the property and the transaction, not the buyer’s residency. There is no NRI surcharge on GST.

Is GST charged on the agreement value or the ready reckoner value?

GST is charged on the agreement value (the transaction value), unlike stamp duty which uses the higher of agreement or ready reckoner value. So the two taxes can be computed on slightly different bases, GST on the price you pay, stamp duty on the higher of price or reckoner.

Does a higher-priced flat pay a higher GST rate?

No, the rate does not rise with price within the residential band. Any under-construction residential flat above the affordable limits is taxed at 5%, whether it is ₹60 lakh or ₹6 crore. The rupee amount rises with price, but the 5% rate is flat.

If I buy an under-construction flat and it completes before I finish paying, does GST stop?

GST applies to the payments that fall due before the completion certificate is issued. Amounts genuinely due and paid after the certificate may fall outside GST, but the treatment depends on the timing of the demands and the certificate. In practice, for a normal under-construction purchase, plan for GST on the full value.

Is GST applicable on under-construction property bought directly from an individual?

GST applies to the supply of construction services by a developer/builder in the course of business. A one-off sale of an under-construction flat by an individual, not in the business of construction, is a different situation; most buyers, though, purchase from developers, where the 1% or 5% applies. Take advice for unusual private under-construction sales.

Does GST apply to the booking amount or token?

GST applies to payments made towards an under-construction flat, so amounts paid as part of the consideration (including booking instalments) attract GST at your rate as they fall due. A fully refundable token that is not part of the consideration is a different matter; confirm how any initial amount is treated.

Is there GST on stamp duty or registration?

No. Stamp duty and registration are themselves taxes/fees and do not attract GST. GST is charged on the flat’s value (for under-construction), not on the stamp duty or registration you pay. They are separate lines that do not tax each other.

What is the difference between GST and stamp duty?

GST is a central tax on the supply of under-construction property; stamp duty is a state tax on the purchase document. GST applies only to under-construction homes; stamp duty applies to all purchases. On an under-construction flat you pay both; on a ready or resale flat you pay only stamp duty.

Do I get any GST benefit for a first home?

There is no separate first-home GST concession; the benefit available is the 1% affordable rate, which any qualifying affordable flat enjoys regardless of whether it is your first. If your under-construction flat meets both affordable limits, you pay 1%; otherwise 5%.

Is GST charged on the carpet area or the value?

GST is charged on the value (the agreement value), not on the area. Carpet area matters only for testing affordable-housing eligibility (the 60 or 90 sq m limit) to decide whether the 1% or 5% rate applies. Once the rate is fixed, it is applied to the rupee value.

Can I avoid GST by buying a ready flat?

Yes, in effect. A ready-to-move flat with its occupancy certificate, or a resale flat, carries no GST. Buying ready rather than under-construction avoids the GST entirely, which is a genuine saving, though ready flats often carry a higher base price and you should compare on the all-in cost.

Does GST apply if I buy land and build a house myself?

The land purchase itself has no GST. If you engage a contractor to build, the construction services they provide can attract GST. So self-building separates into a GST-free land purchase and a potentially GST-bearing construction contract, rather than the single 1%/5% rate on a developer’s under-construction flat.

Is the 1% GST rate automatic for cheap flats?

No. The 1% rate requires the flat to meet both the carpet-area limit and the ₹45 lakh price limit. A cheap flat that exceeds the size limit, or a small flat priced above ₹45 lakh, does not qualify and is taxed at 5%. Always test both conditions.

Does Being Real Estate help me work out the GST?

Yes. As a primary-marketing partner, we confirm whether each shortlisted flat is under-construction or ready, test affordable eligibility, and put the exact GST alongside stamp duty in a single all-in cost, at zero brokerage to you. You can reach us by phone at +91 74003 51422.

Is GST charged on possession or handover?

GST is charged on the payments made towards an under-construction flat as they fall due, not as a separate charge at possession. By the time you take possession, the GST on all your instalments totals 1% or 5% of the value. If the flat was already complete (with an occupancy certificate) when you bought, no GST applies at all.

Do I pay GST if I buy at the pre-launch stage?

Yes. A pre-launch or early-stage booking is the earliest form of under-construction purchase, so GST applies at 1% or 5% on your payments. In fact, buying early means more of your payments fall before completion, so the GST clearly applies. Only a completed, occupancy-certificate flat escapes GST.

Is GST charged on floor-rise charges?

Floor-rise charges bundled into an under-construction flat purchase are generally part of the same composite supply and taxed at the flat’s rate (1% or 5%), not separately at a higher rate. Check your cost sheet to confirm they are taxed at the flat’s rate.

Can two buyers in the same project pay different GST?

Yes, if one flat qualifies as affordable (≤60 sq m and ≤₹45 lakh) and another does not, the first is taxed at 1% and the second at 5%. Two buyers of identical under-construction flats at the same price, though, pay the same rate. A ready unit in the same project would carry no GST.

I booked before 2019 but take possession now, what GST applies?

For projects that were ongoing during the April 2019 transition, developers were given a one-time option between the old rates (with input tax credit) and the new rates (without). Which applies to your booking depends on the option the developer exercised for that project. For any new project, only the current 1% and 5% rates apply.

Is GST part of the registered value of the property?

No. Stamp duty is charged on the agreement value (or reckoner, if higher), and GST is a separate tax on the construction service. GST is not added into the registered value for stamp duty purposes; the two are computed separately on their own bases.

Does paying GST give me any extra ownership right?

No. GST is simply a tax on the construction service; it does not confer any additional ownership benefit beyond what your agreement and registration already give you. Your ownership comes from the registered agreement, not from the GST paid.

Is GST charged on the brokerage I pay?

Brokerage is a separate service and can attract GST at the rate applicable to brokerage services, distinct from the GST on the flat. With Being Real Estate, as a primary-marketing partner paid by the developer, there is zero brokerage to you, so the question does not arise on our side.

What is anti-profiteering in GST on real estate?

Anti-profiteering rules require businesses, including developers, to pass on the benefit of reduced GST rates or input tax credit to customers rather than pocketing it. In real estate it was most relevant during rate transitions. As a buyer, it is a protection that the benefit of a lower rate should reach you, not a charge you pay.

Does GST apply to under-construction villas and row houses?

Yes. Under-construction independent houses, villas and row houses bought from a developer attract GST like flats, at 1% if they meet the affordable definition or 5% otherwise. A completed, occupancy-certificate villa, or a resale, carries no GST.

Do I pay GST on the corpus or society-formation charges?

Treatment depends on how these charges are structured. Amounts that form part of the consideration for an under-construction flat can follow the flat’s GST rate; genuine deposits or pass-through amounts may be treated differently. Ask the developer to clarify how each such charge is taxed on the cost sheet.

Is GST higher for luxury or premium flats?

No. The residential rate is 5% for any under-construction flat above the affordable limits, whether mid-segment or ultra-luxury. The rupee amount of GST rises with the price, but the rate stays at 5%. There is no separate higher GST band for luxury homes.

Can I claim GST in my income tax return?

No. GST on a residential home is not an income-tax deduction and cannot be claimed in your return. (Stamp duty and registration can be claimed under Section 80C, but that is a different tax.) Residential GST is simply a final cost.

What if the developer is not registered under GST?

Developers carrying out construction as a business are required to be GST-registered and to charge GST on a proper tax invoice showing their GSTIN. If a developer claims no GST on an under-construction flat without a valid reason (such as the flat being complete), question it and verify the GSTIN and invoices.

Is GST charged on the agreement value or on each receipt?

GST is charged on each payment as it is received or falls due, at your rate, so it appears on each demand and receipt. The total across all receipts equals 1% or 5% of the full agreement value. Both views describe the same total tax.

Is GST applicable on a flat being built by a co-operative housing society?

Where a society or its appointed developer constructs and sells under-construction flats, GST can apply to that construction service like any other project. The exact treatment depends on the structure (self-redevelopment, appointed developer, member allotment versus open-market sale), so confirm the specifics for that project.

Does GST apply to leasehold flats?

The sale of an under-construction flat attracts GST regardless of whether the land is freehold or leasehold, because GST is on the construction service. Any separate lease premium has its own treatment. The freehold-versus-leasehold distinction does not, by itself, change the 1% or 5% on an under-construction purchase.

Does GST apply if I buy under-construction property as an investment?

Yes. The purpose of your purchase, end-use or investment, does not change the GST on a residential under-construction flat; it is 1% or 5% either way. For commercial property bought as an investment, the 12% rate applies, with input tax credit available to an eligible registered buyer.

How is GST different from registration charges?

GST is a central tax on the under-construction flat’s value; registration is a small state fee (1%, capped at ₹30,000) to record ownership. GST can be lakhs on a new flat; registration is capped at ₹30,000. They are unrelated charges that apply to different things.

Is GST refundable if possession is delayed?

A delay in possession does not by itself make the GST refundable; the GST was due on the payments as they were made. Compensation for delay is a separate, contractual or RERA matter. The GST itself is not returned simply because the project ran late.

Is the 1% GST rate available in Mumbai at all?

Rarely in central Mumbai, where almost no under-construction stock is at or below ₹45 lakh, but yes in the affordable belts of the wider MMR, parts of Kalyan, Dombivli, Ambernath, Badlapur and Karjat, where compact under-construction homes can sit within both the 60 sq m and ₹45 lakh limits.

Does GST apply to under-construction property bought directly at a builder’s launch offer?

Yes. A launch-offer price is still a price for an under-construction flat, so GST applies at 1% or 5% on top of it. A “GST-free” or “GST waiver” launch offer is really the developer absorbing the GST into the deal as a discount; the tax itself still exists and is paid to the government.

Is GST the same across all states?

Yes. Unlike stamp duty, which is a state tax that varies by state, GST is a central tax with uniform rates nationwide, 1% affordable, 5% other residential, 0% ready and resale, 12% commercial. So the GST on an under-construction flat is the same in Maharashtra as in Karnataka or Delhi; only the stamp duty differs by state.

Can I negotiate GST with the builder?

No. GST is a statutory rate set by the government and paid to it; a developer cannot lower it. What a developer can do is absorb the GST into the deal as a discount (a “GST waiver” offer), but that is a price adjustment, the tax itself is still charged and paid. Negotiate the price; you cannot negotiate the tax rate.

Is GST charged on the carpet-area value or super built-up value?

GST is charged on the agreement value (the price), not on any area figure. Area matters only to test affordable eligibility (the 60 or 90 sq m carpet limit) for the 1% rate. Once the rate is set, it applies to the rupee value you are paying, however the area is described.

What document proves I paid GST?

The developer’s tax invoice for each payment, showing their GST registration number (GSTIN) and the GST charged, is your proof. Keep every tax invoice alongside your demand letters and receipts. The cumulative GST across these should match 1% or 5% of your total agreement value.

Is GST charged on car parking bought separately?

Parking sold as part of an under-construction flat purchase is generally part of the composite supply and taxed at the flat’s rate. How a separately-priced parking space is treated depends on the structure of the sale, so check the cost sheet. Bundled with the flat, it should follow the flat’s GST rate.

Does GST apply to the maintenance deposit collected at purchase?

A genuine refundable maintenance or sinking-fund deposit may be treated differently from the consideration for the flat. Amounts that are really part of the purchase price tend to follow the flat’s rate, while true deposits may not attract GST. Ask the developer to clarify the treatment of each such line on the cost sheet.

Does GST apply to a flat in a completed building that is being renovated?

No. A completed building with its occupancy certificate is outside GST on sale, and renovation by the owner does not bring the sale back into GST. You would pay GST only on renovation services from a contractor, not on the purchase of the completed flat itself.

Do I pay GST at the allotment-letter stage?

GST is charged on payments as they fall due. An allotment letter usually accompanies an initial payment, and GST applies to that payment at your rate. The allotment itself is not a separate taxable event; the GST follows the money you pay towards the under-construction flat.

Is GST included in the “all-inclusive” price developers quote?

Not always, “all-inclusive” can mean inclusive of floor-rise, PLC and parking but still exclusive of GST and stamp duty. Always ask specifically whether the quoted figure includes GST. The safest assumption is that GST and stamp duty are extra unless the developer confirms in writing that they are included.

Does GST apply to under-construction property in a gram panchayat area?

Yes. GST is a central tax and does not depend on the municipal jurisdiction, so an under-construction flat in a gram panchayat area attracts the same 1% or 5% as one in a city. (Stamp duty, by contrast, is lower in gram panchayat areas, because that is a state tax.)

Is there GST on the home-loan processing fee?

Yes, but that is GST on the bank’s service, charged on the processing fee, and is separate from the GST on the flat. It is a small amount on the fee, not on the property. Do not confuse it with the 1% or 5% GST on an under-construction home.

Does combining two flats change the GST rate?

Each under-construction flat is taxed on its own value and eligibility. Combining two flats does not create a special rate; if each is above the affordable limits, each is taxed at 5%. The affordable 1% rate is tested per qualifying unit, not on a combined larger home.

Is GST applicable on the transfer charges in a resale?

A resale flat itself carries no GST. Society transfer charges are a separate service and may attract GST depending on the amount and the society’s GST position, similar to maintenance. The flat’s resale is GST-free; only certain associated services can attract GST.

Does the GST rate depend on who the builder is?

No. The rate depends on the property (under-construction or ready, residential or commercial, affordable or not), not on the identity or size of the developer. A small builder and a large one both charge the same statutory 1% or 5% on a comparable under-construction residential flat.

Is GST charged again if I sell the flat later?

No. When you later sell the flat, it will be a resale of a completed property, which carries no GST. Your buyer pays stamp duty, not GST. GST is a one-time event tied to the original under-construction purchase, not a recurring tax on the property.

Where can I verify the current GST rates on property?

The GST Council’s notifications and the Central Board of Indirect Taxes and Customs (CBIC) are the official sources for current property GST rates. For a specific purchase, have your developer’s tax invoices and, if needed, a chartered accountant confirm the rate applied. The 1% and 5% residential rates have been stable since April 2019.

How much GST will I pay on a ₹50 lakh or ₹75 lakh flat?

On an under-construction flat at 5%, GST is ₹2.5 lakh on a ₹50 lakh flat and ₹3.75 lakh on a ₹75 lakh flat. If the ₹50 lakh flat is above the affordable carpet limit it is still 5%; only a flat within both the ₹45 lakh and size limits gets the 1% rate. A ready or resale flat at either price carries no GST.

Is GST applicable on an under-construction property bought at a bank auction?

A bank auction usually involves a property on which a borrower defaulted, and its GST position depends on whether it is an under-construction supply by a developer or the transfer of a completed/possessed property. Most auctioned homes are completed and carry no GST, but the treatment turns on the specific facts, so confirm before assuming.

Does GST apply if I upgrade to a larger unit mid-project?

If you switch to a larger under-construction unit, GST applies to the value of the unit you ultimately buy, at the rate for that unit (1% or 5% by affordable eligibility). The higher value simply carries proportionally more GST. The rate is determined by the unit you end up purchasing.

Does GST apply to amenities or a clubhouse charged after possession?

Charges that are part of the under-construction flat purchase follow the flat’s GST rate. Genuinely separate services provided after possession (for example, certain club usage charges) may have their own GST treatment. The one-time purchase GST and any later service charges are distinct, so read what each charge is for.

Is GST applicable on an under-construction flat gifted to a relative?

A gift is a transfer without consideration, and GST is a tax on the supply of construction services for consideration, so a genuine gift is a different question from a purchase. Stamp duty (with the concessional ₹200 family-gift rate in Maharashtra) is the relevant tax on a family gift, not the 1%/5% GST that applies to a purchase from a developer.

Does GST apply to fractional ownership or REIT investments?

Fractional ownership and REIT (Real Estate Investment Trust) investments are financial structures, not a direct purchase of an under-construction flat, and they have their own tax treatment rather than the simple 1%/5% residential GST. If you are investing through such a structure, take specific advice; this guide covers the direct purchase of a home.

Glossary: the GST terms

GST (Goods and Services Tax)

A central indirect tax that applies to the supply of under-construction property as a construction service. It does not apply to completed (ready) or resale property.

Affordable housing (GST)

For GST, a home with carpet area up to 60 sq m in metros (90 in non-metros) and value up to ₹45 lakh. Qualifying under-construction flats are taxed at 1%.

Under-construction property

A property still being built, where payment falls due before the completion certificate. Its sale is a supply of construction services and attracts GST at 1% or 5%.

Ready-to-move property

A completed property with an occupancy or completion certificate. Its sale carries no GST, because no construction service is being supplied.

Occupancy / completion certificate

The municipal document confirming a building is complete and fit to occupy. It is the line that switches GST off: sales after it carry no GST.

Input tax credit (ITC)

A mechanism to offset GST paid on inputs against GST collected. Not available on residential property under the current regime; available on commercial (12%).

One-third land deduction

The rule that deems one-third of a property’s value to be land (outside GST), so tax falls on two-thirds. The 1% and 5% effective rates already reflect it.

Composite supply

A bundle treated as a single supply for GST. Charges like parking and PLC bundled with an under-construction flat follow the flat’s GST rate.

GSTIN

The developer’s GST registration number, which must appear on the tax invoice for your under-construction payments. Confirm it is present and valid.

Reverse of GST on resale

A reminder that resale flats carry no GST: there is no construction service in a transfer between owners, so only stamp duty applies, not GST.

The honest closing on GST

GST earns its reputation as the most confusing cost on a flat, but only because its rate genuinely varies. Once you know the three questions, under-construction or ready, residential or commercial, affordable or not, the rate is fixed and the confusion lifts. For most buyers it comes down to a simple choice between 5% on a new flat, 1% on a qualifying affordable one, and nothing at all on a ready or resale home.

The discipline is the same one that governs every cost in a home purchase: know the number in advance, budget it as your own cash, and compare flats on the all-in figure rather than the sticker. GST is the line that most often makes a ready flat as cheap as, or cheaper than, an under-construction one, so it is precisely the number you do not want to discover late.

That is how we work for every family we place across Mumbai, Thane and Navi Mumbai: GST and stamp duty on the table from the first conversation, the all-in cost made plain, and the right rate confirmed for the specific flat. If you would like that done for a home you are considering, with the exact GST, stamp duty and all-in figure worked out, talk to us, our own number on every recommendation, and zero brokerage to you.