GST on Under Construction Apartments Explained

Whether GST applies turns on one question: had the developer received the completion certificate or occupancy certificate when you signed?

• Agreement signed before the CC or OC: GST applies, at 5 per cent or 1 per cent.
• Purchase after the CC or OC is issued: no GST, since the sale is treated as a transfer of immovable property.
• Resale homes: no GST, whatever their age.

Both rates already account for a standard one-third deduction towards the cost of land, which is why they are described as effective rates.

To qualify for 1 per cent rather than 5, a home must meet both statutory tests, not just one.

• Price: the total value must not exceed ₹45 lakh.
• Carpet area: up to 60 sq m, roughly 645 sq ft, in metropolitan areas including Bengaluru, and up to 90 sq m, roughly 968 sq ft, elsewhere.

Fail either test and the home defaults to 5 per cent. A compact flat priced above ₹45 lakh is taxed at the standard rate even if its carpet area is small.

The 33rd GST Council meeting made the decisive change in 2019, cutting the headline rates sharply while removing input tax credit for residential projects. The GST 2.0 recast of 22 September 2025 reshaped other slabs but left residential property at 1 and 5 per cent.

Developers cannot set off the GST they pay on steel, cement and services against residential sales, so that tax sits inside their cost base rather than being refunded. In return buyers get a simple, low headline rate with no credit to track.

The practical effect is that your GST is predictable: 5 per cent of the agreement value, payable to the developer as the schedule runs, with nothing to reclaim later.

Take a standard under-construction apartment with an agreement value of ₹60 lakh. Because it crosses the ₹45 lakh affordable cap, it attracts 5 per cent, which is ₹3,00,000 of GST.

That amount is paid to the developer across the construction milestones. It is separate from stamp duty and registration, which go to the state at the time of registration.

Every home at Prestige Parklane is under construction, with possession declared for 31 December 2030, so GST at 5 per cent applies. Prices start at ₹56 lakh, above the affordable cap, so the 1 per cent rate does not come into play.

GST is charged on each payment under the time-linked plan: 10 per cent on booking, 10 per cent on the agreement, then 24 instalments of 3.2 per cent every two months to October 2030. Several of the possession-stage charges carry their own GST, at 5 per cent on utilities and generator and 18 per cent on advance maintenance.