GST on under-construction property in India - citizen guide 2026

If you are buying an under-construction flat in India, you pay GST on the builder's price, but a ready-to-move flat with a completion certificate carries no GST at all. The rate depends on whether the home counts as affordable housing.

GST is the tax on the construction service a builder supplies while a flat is being built. You pay it only when the sale happens before the building gets its completion certificate. A finished, ready-to-move flat is treated as immovable property, not a service, so no GST applies.

The rates flow from a set of notifications issued by the Central Board of Indirect Taxes and Customs, the GST authority under the Ministry of Finance. See cbic-gst.gov.in. Notifications 3 to 8 of 2019, Central Tax Rate, dated 29 March 2019, brought in the current structure from 1 April 2019: 1 percent GST on affordable residential apartments and 5 percent on other residential apartments, both without input tax credit.

The value on which GST is charged includes a deduction for the land portion. Paragraph 2 of Notification 11/2017-Central Tax Rate deems one-third of the total amount to be the land value. In Munjaal Manishbhai Bhatt v. Union of India, R/Special Civil Application No. 1350 of 2021, decided 6 May 2022, the Gujarat High Court held this fixed one-third deduction is not mandatory and is optional where the actual land value is ascertainable. So if your agreement separately states a higher land price, the deemed one-third is not forced on you.

1. Check the project's RERA registration and ask the builder whether a completion certificate has been issued for your block.
2. If no completion certificate exists yet, the flat is under-construction and GST applies on the construction value.
3. Confirm whether the home qualifies as affordable housing using carpet area and total price.
4. Apply 1 percent GST for affordable homes or 5 percent for others, without input tax credit, on the value after the land deduction.
5. Get a tax invoice from the builder showing the GST charged and the builder's GSTIN.
6. Pay stamp duty and registration charges to the state separately, since these are not part of GST.
7. If you suspect wrong GST has been charged, raise it in writing with the builder and keep the invoice for any complaint.

• Builder-buyer agreement or allotment letter showing the sale price
• Tax invoice from the builder showing GST amount and the builder's GSTIN
• RERA registration details of the project
• Completion certificate or occupancy certificate, if the flat is claimed as ready-to-move
• Carpet area statement to test the affordable-housing limit
• Payment receipts and bank statements for each instalment

• Confusing GST with stamp duty. Stamp duty is a state charge on registration and always applies, even on ready flats.
• Paying GST on a ready-to-move flat. If the completion certificate was issued before your sale, no GST is due.
• Assuming every cheaper flat is affordable housing. Both the carpet area limit and the ₹45 lakh price cap must be met.
• Forgetting that the 1 percent and 5 percent rates come without input tax credit, so the builder cannot pass credit benefits to you.
• Not insisting on a proper tax invoice with the GSTIN, which you need if you ever dispute the charge.

No. If the flat received its completion certificate before you bought it, the deal is a sale of immovable property, not a construction service, so no GST applies. You still pay stamp duty and registration charges to the state.

It is 1 percent for affordable residential apartments and 5 percent for other residential apartments, both without input tax credit, effective from 1 April 2019 under the CBIC notifications dated 29 March 2019.

A residential apartment with a carpet area up to 60 square metres in metropolitan cities or up to 90 square metres in non-metro cities, where the gross amount charged is not more than ₹45 lakh.

The land portion is excluded. Paragraph 2 of Notification 11/2017 deems one-third of the price as land value. The Gujarat High Court in Munjaal Manishbhai Bhatt held this one-third deduction is optional where the actual land value is known.

No. Resale of a completed flat between two owners is a transfer of immovable property and does not attract GST. Only the first sale of an under-construction unit by the builder does.

No. The builder must issue a tax invoice showing the GST amount and the builder's GSTIN. Always insist on this document, as you need it to verify the rate and to raise any complaint.

No. Stamp duty and registration charges are state levies on the registration of the property and are completely separate from GST. You pay both where the flat is under-construction.

You can verify rates on the CBIC GST portal at cbic-gst.gov.in and in the GST Council's real estate sector FAQ, both linked in the Sources section below.

• GST Council - FAQ on real estate sector, rates and affordable housing definition
• CBIC GST portal - notifications and rates
• Munjaal Manishbhai Bhatt v. Union of India, Gujarat High Court, 6 May 2022

• The RTI Playbook
• RERA complaint for builder delay in possession
• Apply for a home loan and PMAY benefit
• Get an encumbrance certificate online
• Transfer property by gift deed===== GST on under-construction property: How it works, when to pay, and how to claim ITC? =====

GST on under-construction property — complete guide on rates, payment, and input tax credit:

1. Step 1: What is the GST rate? (a) under-construction property (residential): GST is 1% (without ITC — Input Tax Credit — if the property is under the affordable housing scheme — carpet area up to 90 sqm in metro and 60 sqm in non-metro — and the value up to Rs 45 lakh), or 5% (without ITC — for other residential properties), (b) under-construction property (commercial): GST is 12% (with ITC — for shops, offices, commercial spaces), © ready-to-move-in property (with Occupancy Certificate — OC): NO GST (the sale of a completed property is not subject to GST — it is treated as a sale of immovable property), (d) land: NO GST (the sale of land is exempt from GST — only the construction component is subject to GST), (e) the GST is on the construction component (the builder charges GST on the construction cost — not on the land cost — the land cost is excluded — as per the 1/3rd rule — 1/3 of the total value is deemed as land — and 2/3 as construction — for residential — unless the land cost is separately specified).
2. Step 2: When to pay GST. (a) the GST is paid on the installments (the buyer pays GST on each installment — to the builder — who deposits it with the government), (b) the GST is on the construction-linked plan (if the buyer pays in installments — linked to construction milestones — GST is on each installment), © the GST is on the full amount (if the buyer pays upfront — GST is on the full amount — at the time of payment), (d) the GST is NOT applicable after the OC (if the property is completed — and the OC is received — and the buyer pays after the OC — no GST on the amount paid after the OC), (e) the GST is applicable on modifications (if the buyer requests modifications — extra fittings, modular kitchen — GST is on the modification cost — at 5% for residential or 12% for commercial).
3. Step 3: Input Tax Credit (ITC). (a) for residential property (1% or 5%): NO ITC (the buyer cannot claim ITC — the builder also cannot claim ITC — on the inputs used for residential construction), (b) for commercial property (12%): ITC is available (the buyer — if registered under GST — can claim ITC — on the GST paid — but only if the property is used for business), © the builder's ITC: (i) for 1% or 5% (residential): the builder cannot claim ITC (on cement, steel, fittings — used in construction), (ii) for 12% (commercial): the builder can claim ITC (on the inputs — and the ITC reduces the builder's cost — which should reduce the price — but in practice, the builder may not pass on the benefit), (d) anti-profiteering: the builder must pass on the ITC benefit (to the buyer — as a price reduction — under Section 171 of the CGST Act — and the National Anti-Profiteering Authority (NAA) can penalize the builder for not passing on the benefit).
4. Step 4: Common issues. (a) builder charging GST at wrong rate (the builder charges 12% instead of 5% — on a residential property — or charges GST after the OC — which is wrong), (b) GST on land cost (the builder charges GST on the full value — including the land — without applying the 1/3rd rule — which inflates the GST), © ITC not passed on (the builder claims ITC — but does not reduce the price — the buyer pays the full price — and the builder pockets the ITC benefit), (d) GST on parking (the builder charges GST on open/closed parking — open parking is not subject to GST — closed parking may be subject to GST — if it is a separate commercial unit), (e) GST on preferential location (PLC — preferential location charges — GST is applicable — at 5% or 12% — depending on residential or commercial), (f) refund of GST (if the buyer cancels the booking — and the builder refunds — the GST can be refunded — but the builder may not refund the GST — and the buyer has to claim it from the government — which is complex).
5. Step 5: File RTI. File RTI with the GST department (or the CBIC — Central Board of Indirect Taxes and Customs) asking for: (a) the GST rate applicable on under-construction residential property (the specific notification — and the rate — 1% or 5% — and the conditions), (b) the GST rate on commercial property (the notification — and the rate — 12% — and the ITC eligibility), © whether the builder [name, GSTIN] has filed GST returns (for the period [date] to [date] — and the GST collected from buyers — and the ITC claimed), (d) whether there is an anti-profiteering complaint against [builder name] (for not passing on the ITC benefit — and the status — and the action taken by the NAA), (e) the procedure for GST refund (on cancellation of booking — the form — the timeline — and the documents required), (f) the GST on parking and PLC (the notification — and whether GST is applicable — and the rate).
6. Step 6: How to claim refund. (a) if the builder charges excess GST: the buyer can claim a refund (from the builder — and if the builder does not refund: file a consumer complaint — or approach the RERA authority — for excess charges), (b) if the buyer cancels the booking: the GST can be refunded (the buyer files a refund application — with the GST department — in Form RFD-01 — within 2 years — with the cancellation agreement, the GST payment proof, and the builder's credit note), © the GST department processes the refund (within 60 days — and the refund is credited to the buyer's bank account), (d) if the refund is delayed: file RTI (ask for the status — and the reason for delay), (e) Example: Buyer paid Rs 8 lakh GST (at 12% — on a residential property — should have been 5%) — excess Rs 3.5 lakh — the buyer filed a consumer complaint — and got a refund of Rs 3.5 lakh + Rs 50,000 compensation.
7. Step 7: RERA complaint. (a) file a complaint with RERA (Real Estate Regulatory Authority — if the builder charges excess GST — or does not pass on the ITC benefit — or charges GST after the OC), (b) RERA can: (i) order the builder to refund the excess GST (with interest at 11.2% per annum — the SBI home loan rate + 2%), (ii) impose a penalty (up to 10% of the project cost — for charging excess GST), (iii) order the builder to correct the GST rate (and issue a corrected demand letter), © the buyer can also file a consumer complaint (for deficiency of service — and unfair trade practice — and claim compensation for harassment), (d) Example: Builder charged 12% GST on residential property — should have been 5% — RERA ordered refund of Rs 4 lakh excess GST + Rs 2 lakh penalty + Rs 50,000 compensation = Rs 6.5 lakh.

See GST Under-Construction and Find PIO.