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—gst-under-construction-property-india [2026/07/10 22:23] (current) – created - external edit 127.0.0.1
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 +{{htmlmetatags>metatag-description=(GST on under-construction flats in India is 1 percent for affordable homes and 5 percent for others, with no GST on ready-to-move flats. Know the rules clearly now legally)&metatag-keywords=(GST on under construction property India, GST on flat purchase, affordable housing GST rate, completion certificate GST, real estate GST 2026)&metatag-robots=(index,follow)&metatag-og:title=(GST on under-construction property in India - citizen guide 2026)&metatag-og:description=(GST on under-construction flats in India is 1 percent for affordable homes and 5 percent for others, with no GST on ready-to-move flats. Know the rules clearly now)&metatag-og:type=(article)}}
  
 +====== 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.
 +
 +<WRAP info>
 +**Quick answer:** Under-construction homes attract 1 percent GST if they qualify as affordable housing, and 5 percent otherwise, both without input tax credit. A flat that has a completion certificate before you buy it carries no GST, because no construction service is being supplied to you. Stamp duty is separate and always applies.
 +</WRAP>
 +
 +===== What GST on property is =====
 +
 +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 legal position in India =====
 +
 +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 [[https://cbic-gst.gov.in/|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.
 +
 +===== Step-by-step process =====
 +
 +  - Check the project's RERA registration and ask the builder whether a completion certificate has been issued for your block.
 +  - If no completion certificate exists yet, the flat is under-construction and GST applies on the construction value.
 +  - Confirm whether the home qualifies as affordable housing using carpet area and total price.
 +  - Apply 1 percent GST for affordable homes or 5 percent for others, without input tax credit, on the value after the land deduction.
 +  - Get a tax invoice from the builder showing the GST charged and the builder's GSTIN.
 +  - Pay stamp duty and registration charges to the state separately, since these are not part of GST.
 +  - If you suspect wrong GST has been charged, raise it in writing with the builder and keep the invoice for any complaint.
 +
 +===== Documents required =====
 +
 +  * 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
 +
 +===== Common mistakes to avoid =====
 +
 +  * 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.
 +
 +<WRAP center round box>
 +**Real-life example:** Dr. Shrawan Kumar Pathak booked an under-construction 2BHK in Patna district in February 2026 for ₹38 lakh, with a carpet area of 58 square metres. Because the carpet area was under 60 square metres for a metro and the price was below ₹45 lakh, the flat qualified as affordable housing. He paid 1 percent GST, about ₹38,000, instead of the 5 percent, about ₹1.9 lakh, the builder first quoted. He also paid stamp duty separately to the state. Insisting on the correct classification saved him close to ₹1.5 lakh.
 +</WRAP>
 +
 +===== Frequently asked questions =====
 +
 +==== Do I pay GST on a ready-to-move flat? ====
 +
 +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.
 +
 +==== What is the GST rate on an under-construction flat? ====
 +
 +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.
 +
 +==== What counts as affordable housing for the 1 percent rate? ====
 +
 +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.
 +
 +==== Is GST charged on the land value too? ====
 +
 +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.
 +
 +==== Does GST apply to resale of an old flat? ====
 +
 +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.
 +
 +==== Can the builder charge me GST without an invoice? ====
 +
 +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.
 +
 +==== Is stamp duty included in GST? ====
 +
 +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.
 +
 +==== Where can I check the official GST rates? ====
 +
 +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.
 +
 +===== Sources =====
 +
 +  * [[https://www.gstcouncil.gov.in/sites/default/files/2024-02/faq-real-estate-sector.pdf|GST Council - FAQ on real estate sector, rates and affordable housing definition]]
 +  * [[https://cbic-gst.gov.in/|CBIC GST portal - notifications and rates]]
 +  * [[https://indiankanoon.org/doc/48062053/|Munjaal Manishbhai Bhatt v. Union of India, Gujarat High Court, 6 May 2022]]
 +
 +===== Related on RTI Wiki =====
 +
 +  * [[https://righttoinformation.wiki/book|The RTI Playbook]]
 +  * [[https://righttoinformation.wiki/builder-delay-flat-possession-rera-complaint-india|RERA complaint for builder delay in possession]]
 +  * [[https://righttoinformation.wiki/apply-home-loan-pmay-clss-2026|Apply for a home loan and PMAY benefit]]
 +  * [[https://righttoinformation.wiki/encumbrance-certificate-how-to-get-online|Get an encumbrance certificate online]]
 +  * [[https://righttoinformation.wiki/transfer-property-gift-deed-2026|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:
 +
 +  - **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), (c) 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).
 +  - **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), (c) 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).
 +  - **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), (c) 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).
 +  - **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), (c) 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).
 +  - **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), (c) 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).
 +  - **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), (c) 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.
 +  - **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), (c) 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 [[https://righttoinformation.wiki/gst-under-construction-property-india|GST Under-Construction]] and [[https://righttoinformation.wiki/guide/find-pio-2026|Find PIO]].
 +
 +{{tag>gst under construction property 1 percent 5 percent 12 percent itc anti-profiteering rera refund cbic residential commercial 2026}}