GST on Under-Construction Apartments Explained

Published On: 24 September 2026

GST on an under-construction apartment is 5% of the flat price, or 1% for affordable homes. Builders cannot pass on input tax credit at these rates, so this is the final tax you pay. GST gets added to each instalment until the occupancy certificate (OC) comes through. Ready homes that already hold an OC carry no GST at all. Stamp duty and registration are separate state charges that you pay on top.

This guide shows how builders work out the tax and which extra charges attract a higher rate. It also walks through GST on a real payment plan.

What Is the GST Rate on Under-Construction Apartments?

Under-construction homes in India attract 5% GST without input tax credit, while affordable homes attract 1%. The rate applies to the full agreement value, including floor rise and preferred location charges. Both rates have stayed the same since April 2019, including after the GST rate cuts of September 2025.

Home Category	Who Qualifies	GST Rate	Input Tax Credit
Affordable housing	Price up to ₹45 lakh and carpet area up to 60 sq m in metros or 90 sq m elsewhere	1%	Not available
Other residential homes	Any flat that crosses either limit above	5%	Not available
Ready homes with OC	Completed homes sold after the OC is issued	Nil	Not applicable
Resale flats	Homes bought from an existing owner	Nil	Not applicable

The Mumbai region counts as a metro, so the 60 sq m carpet area cap applies in Thane. Most mid and premium homes in Thane cross the ₹45 lakh limit, so they pay 5%.

How GST on an Under-Construction Flat Is Calculated

Land is not a taxable service, so GST law treats one-third of your flat price as land value. The tax then applies only to the remaining two-thirds, which covers construction. The notified rate on that portion is 7.5%, which works out to exactly 5% of your total price.

Here is a simple example for a flat with an agreement value of ₹1 Cr:

Step	Calculation	Amount
Agreement value	Given	₹1,00,00,000
Deemed land value	One-third of the price	₹33,33,333
Taxable construction value	Two-thirds of the price	₹66,66,667
GST at 7.5% on construction value	7.5% of ₹66.67 lakh	₹5,00,000
Effective GST on the flat	₹5 lakh on ₹1 Cr	5%

You can skip this maths, as every demand letter shows GST as a 5% line. Still, knowing the logic helps you check the invoice and spot errors.

Which Charges Attract GST and at What Rate

A flat price is rarely one single number on the cost sheet. Several extra charges sit alongside it, and some carry a higher GST rate than the flat.

Charge	Usual GST Rate	Why
Base price, floor rise and PLC	5%	Part of the flat's agreement value
Car parking sold with the flat	5%	Treated as part of the same supply
Clubhouse membership billed separately	18%	Billed as a separate service
Advance maintenance collected by the builder	18%	Treated as a service charge
Monthly society maintenance	18% above ₹7,500 per member per month	Applies once the society's turnover crosses ₹20 lakh a year
Stamp duty and registration	Nil	State levies, outside GST
Home loan EMIs and interest	Nil	Financial service to you, no GST

Ask your builder to show GST for each charge on a separate line. This makes it easy to see whether a separately billed charge carries 18% instead of 5%.

When Does GST Stop Applying?

GST applies only while the building is under construction. Once the builder receives the OC or completion certificate, the sale no longer counts as a construction service. So any amount you pay after the OC date carries no GST.

This rule matters most for the last instalment. Many payment plans keep 5% to 10% of the price due at possession, often after the OC. If you pay that amount after the OC, the builder should not add GST to it. Check your final demand letter carefully, since some buyers end up paying GST on it by mistake.

GST on Under-Construction vs Ready-to-Move Homes

GST matters when you weigh a new launch against a finished flat, but rarely decides it. The table below compares the two on cost and risk.

Factor	Under-Construction Flat	Ready-to-Move Flat
GST	5% or 1% on instalments paid before the OC	Nil
Price per sq ft	Lower, often with launch offers	Higher, as the builder has finished the project
Payment	Spread over three to five years	Mostly upfront
Rent or EMI overlap	You may pay both until possession	You can move in right away
Delivery risk	Depends on the builder's track record	None
Choice of units	Full choice of floor, view and size	Limited to unsold stock

A lower launch price often more than covers the 5% GST, especially in fast-growing areas. The real question is the builder's delivery record. A delay adds rent and interest costs that no GST saving will cover.

GST vs Stamp Duty: How the Two Taxes Differ

Many buyers mix up GST and stamp duty, since both show up on the same cost sheet. They are

Point	GST	Stamp Duty
Who collects it	Central and state governments through the builder	State government through the sub-registrar
When you pay	With each instalment until the OC	Once, when you register the agreement
Rate in Thane	5% on the flat price	7% for men and 6% for women
Applies to resale	No	Yes
Tax deduction	None for home buyers	Covered under Section 80C in the old regime

So a ready or resale flat saves you GST, but you still pay full stamp duty. Budget for both taxes on a new launch, since together they add around 12% in Thane.

How GST Works on a Real Payment Plan in Thane

Prestige Falcon City Thane, a pre-launch township in Thane West, shows how GST plays out in practice. A 2 BHK here starts at ₹1.62 Cr, well above the affordable limit, so 5% applies. The project follows a construction-linked plan, with ten equal instalments of 10% each.

Stage	Instalment	GST at 5%	Timing
Booking	₹16.20 lakh	₹81,000	At booking
Agreement for sale	₹16.20 lakh	₹81,000	At registration
Stages 3 to 9	₹16.20 lakh each	₹81,000 each	As construction progresses
Final stage	₹16.20 lakh	Nil if paid after OC	At OC and handover

If all ten instalments carry GST, the total comes to ₹8.10 lakh. If the final 10% falls after the OC, GST drops to about ₹7.29 lakh, which saves you ₹81,000. Confirm the exact timing of the last demand with the developer before you sign.

Stamp duty in Thane adds another 7% for male buyers, or 6% for women, at the agreement stage. You can see the full breakup of every charge on the project price page. RERA registration is still in process, so treat these figures as indicative until the price list is out.

Tips to Keep Your GST Cost in Check

Ask the builder to show GST on each charge, so you can spot any item billed at 18%.
Request that parking and clubhouse fees be bundled into the flat price where the builder allows it.
Plan the final instalment for after the OC date, so it carries no GST.
Verify the builder's GST number on the government GST portal before you make any payment.
Keep every GST invoice safely, since you will need them for resale and loan records.

FAQs

1. What is the GST rate on an under-construction flat in 2026?

The GST rate is 5% for regular homes and 1% for affordable homes, both without input tax credit. These rates have stayed unchanged since April 2019, even after the September 2025 GST reforms.

2. Is GST charged on a ready-to-move flat?

No GST applies to a flat sold after the builder receives the occupancy or completion certificate. Resale flats bought from an existing owner also carry no GST, though you still pay stamp duty.

3. Is GST charged on the land value of a flat?

GST law treats one-third of the flat price as land value and taxes only the remaining two-thirds. That is why the 7.5% rate on construction works out to an effective 5% on your total price.

4. Does GST apply to car parking and clubhouse charges?

Parking sold along with the flat usually attracts the same 5% rate as the flat itself. Clubhouse membership or advance maintenance billed as a separate service can attract 18% GST.

5. Can I claim a refund of GST paid on a flat?

Home buyers cannot claim input tax credit or a refund of GST on a flat for personal use. You may get a refund only if you cancel the booking and the builder issues a credit note.

6. How much GST will I pay on a 2 BHK at Prestige Falcon City Thane?

A 2 BHK with a ₹1.62 Cr base price attracts about ₹8.10 lakh in GST at 5%. That falls to about ₹7.29 lakh if you pay the final instalment after the OC is issued.