Guide · Buying

GST on an under-construction flat in India

The central GST rates on under-construction flats (1% affordable, 5% other), what counts as affordable, when no GST applies and why you cannot claim credit.

Checked on against the official sources at the bottom of the page.

In short

GST on a flat bought from a promoter before it is complete is fixed by the GST Council and the same in every state. The GST Council’s real estate FAQ gives the effective rates from 1 April 2019: 1% for an affordable residential apartment and 5% for other residential apartments, in both cases without input tax credit and after deduction of the value of land. “Affordable” means a carpet area of up to 60 square metres in a metropolitan city or 90 square metres elsewhere and a gross amount of not more than ₹45 lakh. A flat sold only after the completion certificate or first occupation, with the whole price received after that date, is outside these rates.

The rates

ApartmentEffective GSTCredit
Affordable residential apartment1% of total consideration, after deduction of the value of landNo input tax credit
Other residential apartment5% of total consideration, after deduction of the value of landNo input tax credit
Commercial apartment in a residential project (commercial carpet area up to 15%)5%No input tax credit
Commercial apartment in other projects12%With credit

The rates come from Notification 03/2019-Central Tax (Rate) and the GST Council FAQ (Q1, Q5, Q6). The notification lists central tax of 0.75% and 3.75% for the two residential categories; the FAQ states the effective rates above. The 56th GST Council meeting of 3 September 2025 changed some rates; its release does not list any change to the residential apartment rates. To be sure of the rate in force on your payment date, ask the promoter for the GST invoice and check the rate on the CBIC and GST Council websites.

What counts as “affordable”

An affordable residential apartment is one in a project that began on or after 1 April 2019 (or an ongoing project where the promoter opted for the new rate), with:

  • carpet area up to 60 square metres in metropolitan cities or 90 square metres in other cities and towns; and
  • a gross amount charged of not more than ₹45 lakh.

The metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (the whole of MMR). The gross amount adds the consideration, the amount charged for land, and “any other amount charged by the promoter from the buyer … including preferential location charges, development charges, parking charges, common facility charges etc.” So a flat with a small area can lose “affordable” status because of extra charges. See carpet area vs built-up area.

When no GST applies

The rate applies “except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier”. So:

  • A ready flat sold with the entire price paid after the completion certificate or first occupation: not within these rates.
  • A flat where part of the price is paid before that date: the part received before is covered.

Check the date of your completion or occupancy certificate against your payment schedule.

No credit for you, nothing to claim

The 1% and 5% rates are “without ITC”. The promoter cannot take input tax credit and you cannot claim it either: the rate already takes the promoter’s costs into account. The old effective rates of 8% and 12% with credit were available only to ongoing projects whose promoters opted in by 10 May 2019, and were to be passed through in price. They do not apply to projects started on or after 1 April 2019 (FAQ Q1, Q4).

What the promoter must do (so you know what to ask)

The promoter pays the tax from the cash ledger and must buy at least 80% of inputs and input services from registered suppliers, or pay tax on the shortfall by reverse charge (FAQ Q8-10). Ask the promoter for a GST invoice at each payment, and for the GSTIN of the project.

RERA and GST together

RERA treats the promoter’s agreement for sale as the basic document and caps advance payments at 10% before it is signed (s. 13). The agreement should state the GST payable and when. See agreement for sale and sale deed.

What it costs

  • GST on a flat: effective 1% or 5% of the total consideration after the value of land is deducted. The FAQ gives these effective rates “after deduction of value of land”. Ask the promoter to show how the land value was worked out.
  • Stamp duty and registration are separate and set by the state: stamp duty and registration charges in India.
  • Calculation: GST payable = effective rate (1% or 5%) x total consideration, the effective rate being stated after deduction of the value of land.

Which professional to consult

A chartered accountant or a property lawyer (advocate) enrolled with the State Bar Council can read the GST clauses of the agreement and the invoices. This guide states the published rule and is not tax advice. See property lawyers.

Frequently asked questions

Is GST charged on a ready-to-move flat?

Not where the entire consideration is received after the completion certificate or first occupation, whichever is earlier. If part was paid before, that part is covered.

Can I claim input tax credit on a flat I buy to live in?

No. The 1% and 5% rates are given without input tax credit.

Does the 1% rate depend on the city?

The area limit does: 60 square metres in a metropolitan city and 90 square metres elsewhere, with the ₹45 lakh cap on gross amount in both cases.

Is the GST rate the same in every state?

The rates are fixed by the GST Council and are the same across the country; check the date and the project’s category.

Who pays the GST, the buyer or the promoter?

The promoter charges it in the price and invoices it; you bear it as part of the consideration.

More guides on buying

Sources

All guides · Payotte India