The short version
Under the regime introduced from April 2019, GST on an under-construction residential apartment has been described as five percent on a reduced effective basis for non-affordable housing, and one percent for affordable housing, in both cases without input tax credit for the buyer. These are the commonly cited figures. Treat them as a starting point and check the current notification or a tax adviser, because the GST Council can change rates and conditions.
This is general information, not tax advice. Confirm the current rate and its conditions with a chartered accountant, and ask the developer to show GST separately in your cost sheet.
Under-construction vs ready-to-move
The key dividing line is the completion certificate, or the first occupation, whichever is earlier. Generally, GST applies to a flat when the sale is made before that point. Once the completion certificate has been issued, the sale of a completed apartment is generally not subject to GST, although stamp duty and registration still apply.
| Situation | GST position (general) | Comment |
|---|---|---|
| Booked under construction, no completion certificate yet | GST applies on instalments paid | Rate depends on whether the project is affordable or not |
| Bought after completion certificate is issued | Generally no GST | Stamp duty and registration still apply |
| Resale of an already completed flat | Generally no GST | Capital gains and other taxes may apply to the seller |
| Land portion in a project | Treated as part of the composite supply | A deduction for the land share is built into the effective rate |
This is one reason that under-construction homes can carry a visible tax cost that a ready flat does not. It is worth including in any comparison. Our post on Prestige Huyilalu vs resale apartments looks at other trade-offs.
Affordable and non-affordable housing
The lower rate applies only to units that meet the affordable housing definition. In broad terms this has depended on the carpet area of the unit, with different limits for metropolitan and non-metropolitan cities, and a cap on the value of the unit. Those thresholds are set by the government and can be revised. A premium 2, 3 or 4 BHK apartment in a project like Prestige Huyilalu, with a starting price of ₹75 Lakhs onwards*, is not likely to meet an affordable housing value cap, so the non-affordable rate is the one to plan for. Final applicability depends on the final pricing and the rules at the time.
Questions to ask about GST before you sign
- Is the quoted price inclusive or exclusive of GST?
- At what rate is GST being charged, and on which notification or rule does the developer rely?
- Is GST charged on every instalment, and will each invoice show it separately?
- Is GST charged on parking, club membership, maintenance deposit or interiors, and at what rate?
- If the rate changes before the next instalment, which rate applies?
The answers belong in the cost sheet or the agreement for sale. A buyer who sees the tax laid out line by line is far less likely to face a surprise.
Input tax credit (ITC) explained
Input tax credit is a mechanism where a business can offset the GST it paid on its purchases against the GST it collects. A developer pays GST on cement, steel, services and more. Under the current simplified scheme for residential apartments, the developer is generally not allowed to claim ITC on those inputs, and the reduced effective rate already reflects that.
For you as a home buyer, there is no ITC to claim, because you are buying for personal use. You pay the rate and that is the final cost. The only question to ask is whether the rate in your cost sheet matches the effective rate under the rules.
- Ask whether the quoted price is exclusive or inclusive of GST.
- Ask whether GST is charged on each instalment as it falls due.
- Ask whether any GST on the land component, parking or club membership is shown separately.
- Keep GST invoices or receipts for each payment.
How GST fits into your total cost
Here is a simple illustration with a hypothetical base price. Assume a base price of ₹1,00,00,000 and a GST rate of 5 percent for the example. GST would be ₹5,00,000, and the actual rate in force at the time of payment is what counts.
| Item | Illustration |
|---|---|
| Base price (hypothetical) | ₹1,00,00,000 |
| GST at assumed 5% | ₹5,00,000 |
| Stamp duty and registration (see separate guide) | Extra; depends on current rates |
| Other charges (parking, maintenance deposit etc.) | As per cost sheet |
Hypothetical numbers. They are not Prestige Huyilalu prices. The project's final pricing is confirmed at launch.
Read this alongside the stamp duty guide, the home loan guide and the price details. For where the tax sits in the wider decision, see the investment guide.
