GST applies only to under-construction flats. It is 1% (affordable housing) or 5% (other residential), in both cases without Input Tax Credit for the builder. A ready-to-move flat with an Occupation Certificate (OC) is outside GST — you pay only stamp duty. GST is charged on just two-thirds of the value, as one-third is treated as land.
GST Rate on Flat Purchase — Decision Table
The GST rate for every common flat-purchase scenario in India, with whether the builder gets Input Tax Credit.
| Property Type | GST Rate | Builder ITC | Condition |
|---|---|---|---|
| Affordable housing — under-construction | 1% | No | Carpet ≤60 sqm metro / ≤90 sqm non-metro & value ≤ ₹45L |
| Other residential — under-construction | 5% | No | All other under-construction flats |
| Ready-to-move-in (OC/CC received) | Nil | — | Occupation/Completion Certificate issued |
| Resale of a completed flat | Nil | — | Sale of immovable property — Schedule III |
| Plot / land only | Nil | — | Sale of land — outside GST |
| Parking bundled with the flat | Same as flat | No | Composite supply with the flat |
| Commercial unit (office/shop) — under-construction | 18% | Yes | As per the current GST rate schedule |
Residential rates (1% / 5%, no ITC) follow the 2019 real-estate scheme and were retained under GST 2.0 (eff 22 Sep 2025). Confirm the commercial rate on the official GST portal before signing.
Under-Construction vs Ready-to-Move
GST is a tax on the supply of construction service. Once a building has its Occupation Certificate (OC) or Completion Certificate (CC), the construction is legally over and the sale becomes a transfer of immovable property — which Schedule III of the CGST Act keeps outside GST.
Ready-to-move — no GST
- OC / Completion Certificate already issued
- Resale flats and completed units
- Sale of plots and land
- Only stamp duty & registration apply
- No 2/3 rule — GST is simply nil
Under-construction — GST applies
- OC / CC not yet received
- Booked while the project is being built
- 1% for affordable, 5% for other homes
- Builder cannot claim ITC
- GST on 2/3 of the value
A builder may market a near-finished unit as "ready to move" to look GST-free, but the only legal test is the actual Occupation Certificate. If the OC has not been issued, the flat is still under construction and GST applies — regardless of how finished it looks. Always ask for the OC in writing before you assume nil GST.
Not sure if your flat is legally under-construction or ready-to-move?
Get My GST Position →The 2/3 Rule — GST Is Not on the Full Price
GST is not charged on the whole agreement value because land is not a supply under GST. As per Notification 11/2017-CT (Rate), one-third of the total consideration is deemed to be the land cost and is removed from the GST base. So GST is levied on only two-thirds of the agreement value.
How Much GST — ₹60 Lakh Flat
1% Affordable home
5% Other under-construction
The GST calculator can help you model your own numbers. Stamp duty and registration are charged separately on the full value, not on 2/3.
Affordable status turns on two limits met together: carpet area (≤60 sqm metro / ≤90 sqm non-metro) and gross value ≤ ₹45 lakh. Cross either limit — even by a rupee — and the whole flat jumps from 1% to 5%. On a ₹45 lakh home that is roughly ₹1.2 lakh of extra GST, so it is worth checking the exact carpet area before you sign.
Affordable Housing — Who Qualifies for 1%?
Both conditions must be satisfied together for the 1% rate. Miss either one and the flat is taxed at 5%.
| Criterion | Metropolitan cities | Non-metropolitan cities |
|---|---|---|
| Carpet area | Up to 60 sq. metres | Up to 90 sq. metres |
| Gross value (all-inclusive) | Up to ₹45 lakh | Up to ₹45 lakh |
Metros for this test: Delhi-NCR, Mumbai (MMR), Bengaluru, Chennai, Hyderabad and Kolkata.
No Input Tax Credit for the Builder
Both the 1% and 5% residential rates come without ITC for the developer. This was the deliberate trade-off in the 2019 real-estate scheme — a lower headline rate for buyers, but the builder cannot recover GST paid on cement, steel and other inputs. GST 2.0 cut cement from 28% to 18% (eff 22 Sep 2025), lowering the builder's embedded input cost even though the rate you pay on the flat is unchanged.
You benefit when
- You buy an under-construction affordable home at just 1%
- You buy a ready-to-move flat with a valid OC — nil GST
- You buy a resale/completed flat — no GST at all
Watch out when
- A builder promises to "pass on" ITC — none exists at 1%/5%
- You cross the ₹45 lakh / carpet-area line and jump to 5%
- You assume "ready" without seeing the Occupation Certificate
Buying commercial space or a mixed-use unit? The GST treatment is different.
Talk to a GST Expert →Stamp Duty & Other Charges a Buyer Pays
GST is only one levy. Stamp duty and registration are state charges on the full agreement value (or circle rate, if higher) and are entirely separate from GST — you cannot set one off against the other.
| Charge | Typical rate | On what | GST set-off? |
|---|---|---|---|
| Stamp duty | 4%–7% (state-wise) | Full agreement value | No |
| Registration charges | 0.5%–1% | Full agreement value | No |
| TDS u/s 194-IA | 1% | If flat value ≥ ₹50 lakh | — |
| Society maintenance | 18% | If > ₹7,500/month per unit | — |
| Club / amenities charges | 18% | Billed separately by builder | — |
| Preferred location charges (PLC) | Same as flat | Part of the flat consideration | — |
TDS under Section 194-IA is deducted by the buyer from the payment to the builder when the flat value is ₹50 lakh or more.
- Confirm under-construction vs ready-to-move (OC)
- Get the affordable/other classification in writing
- Check GST is on 2/3 of value, not the full price
- No ITC promise at 1%/5% — ignore such claims
- Stamp duty & registration budgeted separately
- TDS u/s 194-IA if value ≥ ₹50 lakh
- Parking / PLC taxed at the flat rate
- Maintenance & club GST checked on the demand letter
The 1/3 land deduction is a flat deeming provision — it applies whether the land is worth more or less than a third in reality. You cannot claim a bigger land deduction to reduce GST, and the builder cannot charge GST on the full value. If your builder is charging 5% on 100% of the price, the invoice is wrong.
Frequently Asked Questions
Related TaxClue services
Buying a Flat? Get the GST Right Before You Sign
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