Is GST applicable on the purchase of a new flat?

GST is applicable only if the new flat is under construction during the time of sale. Completed flats with an Occupancy Certificate are exempt. Understanding GST for flats is important for buyers to understand the proper applicability of the tax.

Does the payment schedule affect the GST amount on a flat purchase?

Yes, there will be GST on payments made before issuance of the Occupancy Certificate. Payments made after the issuance of the Completion Certificate/Occupancy Certificate are not taxable. This has a significant effect on GST for flats liability.

Is there GST on flats below 45 lakhs?

Flats below 45 Lacs can attract 1% GST, provided they are affordable housing. The carpet area and the conditions of the location apply. Correct Classification will ensure accurate GST for flats treatment.

Is GST levied on resale flats?

GST does not apply to resale flats because they are considered sales of immovable property. Buyers have to pay only stamp duty and registration charges, and not GST for flats.

GST on Flats: Exemption on Ready-to-Move & Affordable Housing

GST has had a significant impact on the application of tax to the purchase of residential properties in India. Unlike in the past, GST now applies only to specific categories of flats, primarily those under construction at the time of sale.

For homebuyers, it is essential to understand GST for flats to understand the overall cost of the property, when payments are due, and the tax owed. GST application is not uniform across all property types, and hence it is essential to get clarity before purchasing a flat or an apartment.

Key Takeaways

GST is applicable only to under-construction flats and not to completed ones.

Affordable housing attracts 1% GST, while other housing attracts 5% GST.

A flat which is ready to move with OC is exempt from GST.

Stamp Duty and registration charges are out of the GST.

What is GST for Flats & Apartments?

GST for flats and apartments is the indirect tax levied on the construction service component of a residential property sale. Under the Goods and Services Tax framework, the application of GST is confined only to the situations where a flat will be sold before completion, i.e. before an Occupancy Certificate or Completion Certificate is issued. When this occurs, the transaction is considered a supply of services (construction) rather than a sale of immovable property.

However, GST for apartments does not apply to ready-to-move or resale properties as these are not subject to services under the GST law. By clearly relating tax applicability to construction status, GST facilitates better differentiation by the buyers to make a distinction between taxable and non-taxable property transactions.

Also Read: What is GST and Types of GST?

GST Rate on Under-Construction Flats

GST applies to under-construction flats as under-construction flats are considered a supply of construction services under the GST law. The applicability of GST for under-construction flats depends on whether the flat falls under affordable housing or the non-affordable category.

For affordable housing projects, GST is charged at 1% without any Input Tax Credit. To qualify, the property value must not exceed a certain amount, and the carpet area must be within certain limits. For instance, an under-construction affordable flat priced at ₹40 lakh has a GST of 1%, which is ₹40,000, so the amount is ₹40.40 lakh.

Non-affordable under-construction flats attract 5% GST also without ITC. An example of this is when a flat priced at ₹80 lakhs will attract a GST of ₹4 lakhs, thus making the overall price ₹84 lakhs.

These rates are only for the construction value charged by the builder. Understanding the GST for under-construction flats helps buyers to correctly calculate overall costs and prevent confusion while scheduling payments.

GST on Flats Below ₹45 Lakhs

Flats priced in the affordable housing segment enjoy a concessional GST rate in aid of first-time and budget homebuyers. GST on flats below ₹45 lakhs is applicable only to under-construction properties that meet both price and size conditions defined under the GST law.

To qualify as affordable housing, the value of the property should not exceed ₹45 lakhs. Additionally, the value of the flat to be constructed should be within the prescribed carpet area limits according to the location. GST on flats below ₹45 lakhs is applicable only when both these conditions are satisfied and the property is under construction. Eligible flats are subjected to reduced taxation on GST @ 1% without Input Tax Credit (ITC).

For example, an under-construction flat priced at ₹42 Lacs in a metro city with a carpet area of 58 Sq.m, is eligible for the rate of 1%. Similarly, a ₹40 lakh flat in a non-metro city with a carpet area of 85 sq. m. is also eligible. Correct classification is very important because GST on flats below ₹45 lakhs apply only based on all the criteria.

Criteria	Metro Cities	Non-Metro Cities
Carpet Area Limit	Up to 60 sq. m.	Up to 90 sq. m.
Maximum Price	₹45 lakh	₹45 lakh
GST Rate	1% (without ITC)	1% (without ITC)
Property Type	Under-construction affordable housing	Under-construction affordable housing

GST Applicability on Ready-to-Move Flats

GST is not charged on ready-to-move flats that have a valid Occupation Certificate (OC) or Completion Certificate before they are sold. Under the GST law, such transactions are treated as the sale of immovable property and are outside the scope of taxable supply.

A Completion Certificate (CC) is the certification of the fact that the construction of the building is completed in accordance with approved plans, while an Occupation Certificate (OC) is the certification that the property is fit for occupation and complies with the local building laws.

Buyers tend to get confused between the possession date and the certification status. Even if the possession is pending, GST for flats is not chargeable after posting the issuance of OC/CC. Understanding this difference helps buyers avoid paying the wrong amount of tax and gain clarity on GST for flats when buying property.

GST on Flat Registration & Stamp Duty

GST is not imposed on flat registration and stamp duty since these are also separate levies by the state government. Stamp duty and registration charges are payable under the laws of the states for the legal transfer of ownership of property and are not in the ambit of GST. Therefore, GST for apartment registration is not applicable at any stage in property registration.

Even in the case of GST applicability to the purchase of an under-construction flat, the GST is charged only on the component of construction service payable to the developer. But then, buyers also have to make a separate payment of stamp duty and registration charges at the time of registration. Understanding that there is no GST for apartment registration is useful for buyers as it helps to accurately estimate the total cost of acquisitions, as well as clear confusion between central and state taxes.

GST for Buying a New Flat

GST is payable if you buy a new flat which is under construction at the time of sale. The rate depends on whether the property is considered affordable housing or falls into the non-affordable category. Understanding GST for buying a new flat is important so that the overall cost of purchase can be understood, and the impact of payment over the long term can be calculated.

For affordable housing projects, GST on the purchase of a new flat is charged at 1% without Input Tax Credit, subject to price and carpet area limits. Non-affordable new flats attract 5% GST, also without ITC. These rates are applied to the agreement value mentioned by the Builder.

GST on Flat Purchase: Full Cost Calculation Examples

GST for flat purchase can be understood better if the overall cost is broken down by which category of property the cost falls into. GST impact varies significantly depending on whether a flat is affordable or non-affordable, or ready to move and hence such comparisons are important for buyers.

Example 1: Affordable Under-Construction Flat

Particulars	Amount
Base price	₹40,00,000
GST @ 1%	₹40,000
Total cost	₹40,40,000

In this case, the flat meets affordable housing criteria, resulting in minimal GST impact.

Example 2: Non-Affordable Under-Construction Flat

Particulars	Amount
Base price	₹80,00,000
GST @ 5%	₹4,00,000
Total cost	₹84,00,000

Here, GST adds a significant amount to the overall purchase cost due to the higher rate.

Example 3: Ready-to-Move Flat (With OC)

Particulars	Amount
Base price	₹75,00,000
GST	Nil
Total cost	₹75,00,000

Since GST is not applicable for completed flats, the buyers end up paying only the base price along with stamp duty and registration. These examples really make it clear how the construction status directly affects the final property cost.

Also Checkout: GST Calculator

How to Avoid GST on Flat Purchase

GST on apartment purchase can be legally avoided by taking the right decisions relating to the type of properties and timing of payment. Understanding GST on apartment purchase helps the buyers in minimising their tax expenses and still staying completely within the laws of GST.

Ready-to-Move Flats: Buying a flat which already has the Occupancy Certificate or the Completion Certificate in hand assures that GST is not charged, as the transaction is treated as a Sale of Immovable Property.

Projects With OC Issued: Even for recently completed projects, GST would not be charged once the Occupancy Certificate has been issued, irrespective of the date of possession.

Resale Properties: When purchasing a flat from an existing owner, the transaction does not attract GST since resale transactions are not in the ambit of construction services.

Payment Timing: Scheduling an instalment payment after the issuance of the OC helps avoid GST on money paid after certification.

All methods should be legal and transparent. Proper planning, using valid GST options for apartment purchases, helps buyers optimise their costs without any risk of non-compliance.

Latest GST Updates on Real Estate

Recent decisions by the GST Council have centred on rate stability and on enhancing compliance and clarity in the application of real estate taxation. Staying updated on GST for flat registration helps the buyers and developers grasp the present applicability and obligations.

Stable GST Rates: Concessional rate of 1% for affordable and 5% for non-affordable housing continues without Input Tax Credit.

Construction materials GST reduced: The 56th GST Council meeting made significant GST rate reductions for construction materials, effective September 22, 2025.

Cement reduced from 28% to 18%; Input Tax Credit (ITC) is now accessible.

Sand-lime bricks and stone inlay work reduced from 12% to 5%.

Marble and granite blocks decreased from 12% to 5%.

Bamboo flooring and hardwood packaging materials have been reduced from 12% to 5%.

Affordable Housing Clarity: Notification has reiterated the price and carpet area limits to ensure proper classification and to avoid misuse of the lower GST rate.

Builder Compliance: Builders are required to issue accurate invoices for goods and services tax, follow milestone-based taxation, and maintain detailed records for audit purposes.

RERA Alignment: The GST Council's 53rd meeting exempted statutory RERA collections from GST, considering RERA as a regulatory organisation rather than a commercial entity. This can be addressed briefly in the "Builder Obligations" section to demonstrate regulatory development.

Regulatory Focus: Authorities have ramped up attention on misclassification and errant billing in order to ensure fair GST application on flats.

Buyer Checklist to Save Costs Under GST

Careful verification before purchasing a property can help buyers avoid unnecessary tax costs/billing issues. Following a structured checklist is essential for better financial planning under GST for apartment purchase, and hence, there are fewer chances of error in the GST charges.

Check OC Status: Confirm whether the project is GST-certified (Occupancy Certificate or Completion Certificate), as GST is not payable after obtaining the certificate.

Verify Project Type: Make sure of the type of flat, whether it is under construction, move-in-ready or for resale, since the applicability of GST remains different in each case.

Confirm Carpet Area: Check carpet area measurements carefully in order to ascertain whether the flat qualifies as affordable housing, garnering a lower GST rate.

Review Builder Invoice: Ask for a detailed GST-compliant invoice with the base price in it, along with GST and tax amount separately.

Check Builder Compliance: Check the builder's GSTIN and RERA registration, and match the GST bills with the terms of the agreement.

Plan Payment Timing: Even if possession is delayed indefinitely, once the OC/CC is obtained, any further payments are exempt from GST since the transaction is classified as a sale of immovable property rather than a supply of construction services. To avoid GST, ensure payments for completed units are made only after the OC is issued.

Conclusion

GST on apartment and residential property is largely based on the construction status and affordability classification. Under-construction flats attract 1% GST in the case of affordable housing and 5% in the case of non-affordable housing, and the ready-to-move-in and resale properties continue to be exempt.

GST for Flats/Apartments