GST on Under Construction Apartments Explained

The 1% GST rate on affordable housing has two tests: the builder’s gross charge and the flat’s carpet area. The price cap is ₹45 lakh. The carpet area cap is 60 sq. m in metros such as Bengaluru and 90 sq. m outside metros. A flat must meet both tests. A small home can still attract 5% when it costs more than ₹45 lakh.

The ₹45 lakh limit is based on what the builder charges for the home. It can include parking, development fees, a preferred location charge and common facility charges. Take a flat with a base price of ₹44 lakh and ₹2 lakh in charges that count toward the limit. Its gross price reaches ₹46 lakh, so it falls outside the 1% price band even when its carpet area is within the limit.

Use the RERA carpet area for the size test. A brochure can show a larger saleable area because it includes a share of common space. In Bangalore, 60 sq. m is about 646 sq. ft. A home listed as 800 sq. ft. saleable could still meet the carpet area test. The builder’s total charge must also stay within the cap.

The rule turns on completion or first occupation, whichever happens earlier. When the builder receives the entire price after that point, the sale of the flat is outside GST. Check the certificate and make sure it covers your building or phase. A flat may look ready on a site visit even though the certificate for that tower is still pending.

When part of the price goes to the builder before that point, paying the rest after completion does not by itself remove GST from the deal. A buyer who books a flat during construction should use the tax terms in the agreement to budget for later payments, including the final instalment. The date you get the keys can differ from the date used for the GST test.

When you compare an under-construction flat with a ready-to-move flat, put both prices on the same basis. An ₹80 lakh flat with 5% GST costs ₹84 lakh before other charges. A completed flat priced at ₹83 lakh costs ₹1 lakh less at that point when the sale meets the no-GST rule. Add the stamp duty and other charges for each home before you compare the full cost.

Start with the taxable amount on the builder’s cost sheet. At the 5% effective rate, multiply the amount by 0.05. A ₹20 lakh taxable instalment gives ₹1 lakh in GST, so the invoice total is ₹21 lakh before any other items. At 1%, a ₹5 lakh instalment on an eligible affordable flat carries ₹5,000 GST.

The 1% and 5% figures are effective rates. The standard method already accounts for a land share. Once you use the effective rate on the price that includes land, do not take out the land value again. Both rates are under the scheme where the builder does not claim input tax credit on the apartment supply.

Check whether the price is quoted with GST or plus GST. A taxable price of ₹80 lakh plus GST comes to ₹84 lakh at 5%. A quote of ₹84 lakh including 5% GST already contains that ₹4 lakh tax. Divide the inclusive figure by 1.05 to find the amount before tax when the entire figure is billed at that rate.

The published 2 BHK starting price at Brigade Autograph in Konadasapura, East Bangalore, is ₹1.40 crore. The example below treats ₹1.40 crore as the taxable agreement value for a specific flat. It uses the project’s filed 10:10:70:10 payment schedule and shows GST only on the agreement instalments.

The construction share is split across 15 stages. A 4.5% instalment on this flat is ₹6.30 lakh plus ₹31,500 GST. A 5% instalment is ₹7 lakh plus ₹35,000 GST. Use the quote for your flat to check the amount on each demand. The ₹1.47 crore total in the example covers the agreement value and GST on it; it leaves out stamp duty, registration and any separate builder charges.

A preferred location charge bundled with the construction of the flat follows the GST treatment of the main construction service. That means a premium for the unit’s location can form part of the amount that attracts GST. Ask the builder to show which charges are already in the taxable agreement value so you do not count them again when checking the invoice.

Separately billed items need their own check. The Brigade Autograph cost sheet can show clubhouse fees and advance maintenance outside the agreement value. Check the tax shown against each line rather than adding 5% to every item. Stamp duty and registration are government charges for the property deed and should be budgeted apart from the GST on your flat.

Keep the tax invoice or advance receipt with the bank payment record. For each instalment, check the builder’s GSTIN, taxable amount, rate and tax charged. When part of your payment is an advance already billed with GST, match it against the next invoice. The statement should make clear how much you have paid and what is left.