East Bengaluru buyer answers

How much GST do I pay on a new flat, and when is it zero?

By Gaurav Mongia, acre&key · Published 17 Oct 2026 · Updated 17 Oct 2026

By Gaurav Mongia, acre&key · Published 17 Oct 2026 · Updated 17 Oct 2026

Direct answer: GST on an under-construction flat bought from a builder is usually 1% without input tax credit for an affordable house and 5% without input tax credit for others, under the GST Council's 34th-meeting decisions. If the entire price is paid after the completion certificate or first occupation, whichever is earlier, this GST does not apply. Check invoices with a CA.

Disclosure: acre&key’s advice is free to buyers; we are an authorised sales partner for some projects and may be paid by the developer.

Verify with your lawyer: Whether a payment falls before or after the completion certificate is a contract and title question as well as a tax one. Have your own property lawyer check the agreement and the certificate dates.

Verify with your CA: The rate on your flat, whether it meets the affordable-housing test, and whether your project is on an old-rate option are tax questions. This page explains the official 19 March 2019 PIB note on the GST Council decisions and the GST Council's rate compilation. It is not a personal tax computation.

GST is a separate line on most under-construction cost sheets, so it pays to know which rate applies before you compare two offers. Ready-to-move flats are often described as "GST-free". That is true only when the timing rule below is actually met.

What are the 1% and 5% GST rates on under-construction flats?

The GST Council met for the 34th time on 19 March 2019 and settled how the lower rates agreed at its 33rd meeting would work. PIB published the decisions the same day. In short:

• 1% without ITC on construction of affordable houses. The note defines these as houses of up to 60 sqm in metros or 90 sqm in non-metros with a value of up to ₹45 lakh. It also covers affordable houses in ongoing projects under existing central and state housing schemes that were eligible for the earlier concessional rate.
• 5% without ITC on construction of houses other than affordable houses in new projects. It also applies to ongoing projects. For houses booked before 1 April 2019, the new rate applies to instalments payable on or after that date.
• Conditions: the builder gets no input tax credit at the new rates. At least 80% of inputs and input services (other than capital goods, TDR/JDA, FSI and long-term lease premiums) must be bought from registered persons. If purchases fall short, the builder pays tax at 18% on the shortfall under reverse charge.

Ongoing projects had a choice. Where construction and actual booking had both started before 1 April 2019 and the project was not complete by 31 March 2019, the promoter got a one-time option to stay on the old effective rates of 8% or 12% with ITC. If the option was not exercised in time, the new rates applied. So don't assume your tower is on 5%. Ask the promoter which regime it chose and check your invoices.

The PIB note itself says the decisions are given effect through Gazette notifications and circulars, which alone have the force of law. That's why your CA should read the notification entry, not just the press note.

When is GST on a flat purchase zero?

The GST Council's construction-service rate compilation taxes construction of residential apartments meant for sale, except where the entire consideration has been received after issuance of the completion certificate, where required, by the competent authority, or after first occupation, whichever is earlier.

In plain words, a flat bought ready-to-move, with every rupee paid after that milestone, sits outside this construction GST. If any part of the price was paid before the certificate, the exception may not cover the deal. Ask your CA.

A zero GST line does not mean:

• stamp duty and registration are zero (they are state charges; see how Karnataka's digital e-stamp works and registering a flat on Kaveri 2.0),
• GST can never apply to anything later (apartment maintenance has its own rules; see GST on apartment maintenance),
• or every flat marketed as "ready possession" is outside GST. Payment timing decides it, not the brochure.

The PIB note also deals with TDR, FSI and long-term lease premiums when flats are sold after the completion certificate. It withdraws the exemption on those, but limits the withdrawal to 1% of value for affordable houses and 5% for others, to keep a "fair degree of taxation parity" between under-construction and ready-to-move property. That tax sits with the builder under reverse charge. It is not a buyer-side GST line, so ask your CA before accepting it as one on a demand letter.

What counts as affordable housing for the 1% rate?

The PIB note's test has two limbs:

• Area: up to 60 sqm in metros, or up to 90 sqm in non-metros
• Value: up to ₹45 lakh

Both limbs have to be met. Check the area on your agreement against the carpet area the project disclosed on Karnataka RERA (how to check a project on the Karnataka RERA website), and see carpet area vs super built-up area for why the two numbers differ. Whether your project's location counts as a metro, and which cost-sheet lines count towards the ₹45 lakh value, are questions for your CA reading the notification.

How does under-construction vs ready-to-move change GST?

For the wider trade-off, see under-construction vs ready-to-move flats. For how instalments are staged, see construction-linked vs time-linked payment plans.

What should I check on my own invoices?

• The rate schedule in the compilation lists 0.75% CGST plus 0.75% SGST for affordable apartments and 3.75% plus 3.75% for others, with a valuation rule in paragraph 2 of the notification. Ask your CA how those lines match the 1% and 5% effective rates in the PIB note, and check that your invoice follows them.
• Whether your tower took the old-rate option.
• That the tax is charged on the amounts your agreement and payment plan say are due.
• Any claim that a resale between two individuals carries the same construction GST. Resale is a different tax question, so ask your CA.

How do I keep invoices and the payment plan aligned?

GST on under-construction instalments should follow the payment plan you signed. If a demand mixes base price, PLC and GST without a clear breakup, ask for a line-item tax invoice before you pay. Our page on floor-rise and PLC charges under RERA covers the premium lines.

When you compare two towers, rebuild each offer the same way: base price, PLC, parking, club, corpus, advance maintenance, GST if any, then stamp duty and registration. The hidden costs beyond the base price page lists each line. A lower base price with heavy add-ons and GST can end up costing more than a ready-to-move flat bought after OC.

Practical buyer sequence

1. Ask the sales desk, in writing: is the project on the new 1%/5% rates or the old-rate option?
2. If you are told 1%, test the area and the ₹45 lakh value with your CA.
3. Match every demand invoice to the payment plan in your agreement.
4. If you are told "GST is nil" on a ready flat, confirm no part of the price was taken before the completion certificate or first occupation.
5. Keep the GST invoices with your sale deed. A lender or a future buyer may ask for them.

Frequently asked questions

Is GST 5% on every under-construction flat?

No. An affordable house that meets the GST Council test is taxed at 1% without input tax credit. Other houses on the new rates pay 5% without input tax credit. Some ongoing projects took a one-time option to stay on the old 8% or 12% rates with credit.

When is GST on a new flat zero?

When the entire consideration is received after the completion certificate, where required, or after first occupation, whichever is earlier. That is the exception in the construction-service rate entry. Check your payment dates and invoices with a CA. A "ready" label in a brochure is not enough.

Does the ₹45 lakh affordable cap include parking and PLC?

The PIB note only says value up to ₹45 lakh. Which cost-sheet lines count towards that value is set by the notification, so have your CA map your cost sheet against it before you accept the 1% rate.

Is GST the same as stamp duty?

No. GST, where it applies, is a tax on the construction service. Stamp duty and registration fees are state charges on the conveyance. An under-construction purchase can carry both. A sale after the completion certificate, with the full price paid after it, usually carries only stamp duty and registration.

Do NRI buyers pay a different GST rate on a flat?

No separate NRI rate appears in the GST Council note. The same construction GST rules apply. TDS and payment-account rules are separate questions; see how TDS works on a flat purchase and ask a CA for the full picture.

References

1. PIB, Decisions taken by the GST Council in the 34th meeting held on 19 March 2019 regarding GST rate on real estate sector: https://www.pib.gov.in/Pressreleaseshare.aspx?PRID=1569106, accessed 17 Oct 2026
2. GST Council copy of the same PIB note (PDF): https://gstcouncil.gov.in/sites/default/files/2024-10/34th_gst_press_information_bureau.pdf, accessed 17 Oct 2026
3. GST Council, GST rates on services compilation, Heading 9954 construction services entries (i) and (ia): https://gstcouncil.gov.in/sites/default/files/2024-02/gstservicerates.pdf, accessed 17 Oct 2026

This page explains public rules and processes. It isn't legal or tax advice. acre&key gives buyers advice for free. We are an authorised sales partner for some projects and may be paid by the developer.