Planning to buy an under-construction flat? Before you book your dream home, it’s important to understand how GST on under-construction property works. Unlike ready-to-move-in homes, properties that are still under construction are subject to GST because they are treated as a construction service under Indian tax laws.
Table of Contents
Knowing the applicable GST rates, how the tax is calculated, and when it applies can help you estimate the actual cost of your purchase and avoid unexpected expenses. In this guide, we’ll explain everything you need to know about GST on under-construction properties in 2026 in a simple, easy-to-understand way.
To better understand how GST impacts residential and commercial property transactions, read our complete guide on GST on real estate.
What is GST on Under-Construction Property?
The Goods and Services Tax (GST) applies to under-construction properties because developers provide an ongoing construction service until the project is completed. Therefore, buyers purchasing a home before completion must pay GST along with the property’s base price.
However, if you purchase a ready-to-move-in property after the developer has obtained a Completion Certificate (CC) or Occupancy Certificate (OC), the transaction is treated as the sale of immovable property rather than a construction service, making it exempt from GST.
Not sure which option is right for you? Compare both in our guide on Under-Construction vs Ready-to-Move Property.
Latest GST Rates on Under-Construction Property (2026)
| Property Category | GST Rate | Input Tax Credit (ITC) |
|---|---|---|
| Affordable Housing | 1% | No |
| Non-Affordable Residential Property | 5% | No |
| Commercial Property | 12% | Yes (subject to applicable rules) |
The current residential GST rates introduced in 2019 continue to apply in 2026. If you’re considering a premium home, explore our guide to Luxury Apartments in Gurgaon to understand the costs and benefits of luxury living.
When is GST Applicable?
You need to pay GST when:
- You purchase an apartment before completion.
- The builder receives payments before the Completion Certificate or Occupancy Certificate.
- Construction is still ongoing.
You do not pay GST if:
- The property is ready to move in.
- The builder has already received the Completion Certificate or Occupancy Certificate before the sale.
- You purchase a resale property from an existing owner.
How to Calculate GST on Under-Construction Property (2026)
You calculate GST on an under-construction flat by first reducing the agreement value by one-third as a standard land deduction, then applying the correct GST rate (1% or 5%) on the remaining two‑thirds, and adding this GST to your cost.
Calculating GST on an under-construction property is straightforward once you know whether the home qualifies as affordable housing or non-affordable housing. The GST is calculated on the base sale price of the property (excluding stamp duty, registration charges, and other government levies).
Formula:
GST Amount = Base Property Price × Applicable GST Rate
The final amount payable is:
Total Cost = Base Property Price + GST
Let’s understand this with a few practical examples. Besides GST, buyers should also account for stamp duty and registration charges in Haryana when estimating the total property cost.
Example 1: Affordable Housing Flat
Suppose you’re buying an under-construction flat in a non-metro city for ₹38 lakh. The apartment has a carpet area of 85 sq. m., which falls within the affordable housing criteria.
| Particulars | Amount |
|---|---|
| Base Property Price | ₹38,00,000 |
| Applicable GST Rate | 1% |
| GST Payable | ₹38,000 |
| Total Purchase Cost | ₹38,38,000 |
Takeaway: Since the property qualifies as affordable housing, you pay GST at only 1%, keeping the overall tax burden relatively low.
Example 2: Non-Affordable Under-Construction Flat
Now consider a buyer purchasing a 2 BHK apartment in a metro city for ₹95 lakh. Although the carpet area is 75 sq. m., it exceeds the affordable housing limit for metro cities, so the property falls under the non-affordable category.
| Particulars | Amount |
|---|---|
| Base Property Price | ₹95,00,000 |
| Applicable GST Rate | 5% |
| GST Payable | ₹4,75,000 |
| Total Purchase Cost | ₹99,75,000 |
Takeaway: Properties that don’t qualify as affordable housing attract 5% GST, resulting in a higher overall purchase cost.
Example 3: GST on Instalment-Based Payments
Most under-construction properties are purchased through construction-linked payment plans, where buyers pay in stages as construction progresses.
GST is applicable only on instalments paid before the Completion Certificate (CC) or Occupancy Certificate (OC) is issued. Any payment made after the project receives the CC/OC is not subject to GST.
| Construction Stage | Instalment Amount | GST (5%) | Total Payable |
|---|---|---|---|
| Booking Amount | ₹10,00,000 | ₹50,000 | ₹10,50,000 |
| Foundation Completion | ₹15,00,000 | ₹75,000 | ₹15,75,000 |
| Slab Completion | ₹20,00,000 | ₹1,00,000 | ₹21,00,000 |
| Final Payment (After CC/OC) | ₹50,00,000 | ₹0 | ₹50,00,000 |
Key Point: GST is charged only on payments made while the property is under construction. Once the builder receives the Completion Certificate (CC) or Occupancy Certificate (OC), any remaining payment is treated as the sale of a completed property and is not liable to GST.
GST on Luxury Apartments in Gurgaon
Most premium residential projects in Gurgaon fall under the 5% GST category, as they generally exceed the affordable housing limits. If you’re planning to invest in a luxury apartment, it’s important to calculate:
- GST
- Stamp Duty
- Registration Charges
- Maintenance Deposits
- Club Membership Charges
- Parking Charges
Knowing the complete acquisition cost helps you plan your investment more accurately. Before investing, compare the latest property rates in Gurgaon to make a well-informed buying decision.
Affordable Housing vs Luxury Housing
| Feature | Affordable Housing | Luxury Housing |
|---|---|---|
| GST | 1% | 5% |
| Property Value | Up to ₹45 lakh (subject to eligibility) | Above affordable threshold |
| ITC | No | No |
| Target Buyers | First-time buyers | Premium buyers |
What is the Difference Between GST and Stamp Duty?
Many buyers assume GST replaces stamp duty, but these are different charges. In many states, both GST (where applicable) and stamp duty must be paid during the purchase process.
| Aspect | GST | Stamp Duty |
|---|---|---|
| Levied by | Central Government (via GST Council) | State Government |
| Applies to | Under-construction property purchase (as a service) | All property transactions (registration) |
| Rate | 1% or 5% (residential) | Typically 5–8%, varies by state |
| When paid | During construction, per instalment | At the time of property registration |
| Applicable on resale/ready properties? | No | Yes |
| Governing law | CGST Act, 2017 | State Stamp Act |
Common Mistakes Homebuyers Make While Paying GST on Under-Construction Property
Buying an under-construction property involves more than just comparing prices. Many homebuyers misunderstand how GST works, which can lead to unexpected costs or confusion during the purchase process.
Here are some of the most common mistakes to avoid.
- Assuming GST applies to every property purchase.
- Forgetting to check whether the project has a Completion Certificate.
- Ignoring additional charges such as registration fees and stamp duty.
- Calculating GST only on the advertised property price without understanding the payment structure.
- Not asking the developer for a detailed cost sheet.
Tips Before Buying an Under-Construction Property
Buying an under-construction property can be a smart investment, but it also requires careful planning. Before making your decision, keep these important tips in mind to avoid unnecessary risks and unexpected costs.
Before booking your dream home:
- Verify the project’s RERA registration.
- Check construction progress.
- Review the payment schedule.
- Confirm GST applicability.
- Ask for the latest demand letter.
- Verify Completion Certificate timelines.
- Compare the total acquisition cost instead of just the base price.
Always verify whether the project is RERA registered. Learn more about RERA in Real Estate and why it matters.
Pro Tip: Before paying the booking amount, request a detailed cost sheet from the developer that clearly lists the base price, GST, stamp duty, registration charges, PLC (if applicable), parking charges, maintenance deposits, and any other applicable fees. Understanding the complete financial commitment upfront helps you make an informed and confident home-buying decision.
Why Buyers Choose Under-Construction Projects
Under-construction properties continue to attract homebuyers and investors because they often offer better value, flexible payment options, and stronger long-term appreciation. When purchased from a reputable developer, these projects can provide significant financial and lifestyle advantages.
Despite GST, under-construction homes continue to attract buyers because they often offer:
- Lower entry prices
- Flexible payment plans
- Better appreciation potential
- More inventory choices
- Newer amenities and layouts
For many long-term buyers, these advantages can outweigh the additional GST cost. Avoid costly mistakes by following our complete Home Buying Checklist before booking your property.
How Does GST Affect the Real Estate Sector?
The introduction of the Goods and Services Tax (GST) has significantly changed India’s real estate sector by bringing greater transparency and simplifying the indirect tax structure. Instead of multiple state and central taxes, GST introduced a unified tax system for under-construction properties, making property transactions more streamlined and easier to understand.
While ready-to-move-in properties with a Completion Certificate (CC) or Occupancy Certificate (OC) remain exempt from GST, under-construction residential properties attract GST based on the applicable rate. Here’s how GST has influenced the real estate market:
1. Increased Transparency
GST replaced multiple indirect taxes such as VAT, service tax, and various state-level levies with a single tax system. This has made pricing more transparent, helping buyers better understand the overall cost of purchasing a property.
2. Simplified Tax Structure
A uniform GST framework has reduced the complexity of property taxation. Buyers no longer need to calculate multiple indirect taxes separately, making transactions more straightforward.
3. Greater Confidence for Homebuyers
The combination of GST and the Real Estate (Regulation and Development) Act (RERA) has improved transparency and accountability across the sector. Buyers now have clearer information about pricing, project timelines, and regulatory compliance.
4. Impact on Under-Construction Properties
GST is applicable only to under-construction residential properties, while completed properties with a valid Completion Certificate (CC) or Occupancy Certificate (OC) are not subject to GST. Buyers should therefore factor GST into the total cost when purchasing an under-construction home.
5. Boost to the Affordable Housing Segment
The reduced 1% GST rate for eligible affordable housing projects has helped make homeownership more accessible for many first-time buyers, supporting the government’s affordable housing initiatives.
6. Better Compliance Across the Industry
GST has encouraged developers to maintain more accurate financial records, adopt digital invoicing, and follow standardized tax compliance practices, contributing to a more organized real estate sector.
7. Improved Buyer Awareness
Homebuyers today are more informed about taxes, payment schedules, and the total cost of ownership. This has encouraged greater due diligence before making a property purchase.
8. Continued Long-Term Market Growth
Despite GST increasing the upfront cost of under-construction properties, India’s real estate sector continues to grow, driven by rapid urbanisation, infrastructure development, rising incomes, premium housing demand, and increasing institutional investment. For most buyers, choosing the right project, location, and developer remains far more important than GST alone when evaluating long-term returns.
If you’re looking for premium homes in Gurgaon, explore Ganga Realty projects to discover thoughtfully designed luxury residences in some of the city’s most sought-after locations.
Anantam 85
Ultra-luxury residences on Dwarka Expressway offering expansive green spaces and world-class amenities.
View Project
Nandaka 84
Modern residential community in New Gurgaon designed for connectivity, comfort, and lifestyle.
View Project
Ganga Kashi Residences
Premium residential development offering peaceful living with contemporary amenities.
View Project
Ganga Valley 78
Integrated township living with lush green spaces and a complete lifestyle ecosystem.
View ProjectConclusion
Understanding GST on under-construction property is essential before making any real estate investment. While GST increases the upfront purchase cost for under-construction homes, these projects often offer attractive pricing, flexible payment plans, and long-term appreciation potential.
At Ganga Realty, transparency is a key part of the buying experience. Whether you’re looking for a luxury apartment or a long-term investment in Gurgaon, you receive clear information about pricing, taxes, payment schedules, and project documentation.
FAQs About GST on Under-Construction Property
What is the GST rate on under-construction flats in 2026?
The GST rates remain:
- 1% for affordable housing (without ITC)
- 5% for non-affordable residential properties (without ITC)
Commercial properties may attract different GST rates based on applicable regulations.
Is GST applicable on ready-to-move-in properties?
No. If a property has received a Completion Certificate (CC) or Occupancy Certificate (OC) before the sale, GST is not applicable. However, buyers must still pay applicable stamp duty and registration charges.
How do I calculate GST on an under-construction property?
To calculate GST on an under-construction property, multiply the base sale price (excluding stamp duty and registration charges) by the applicable GST rate.
Formula:
GST Amount = Base Property Price × Applicable GST Rate
Example:
- Base Property Price: ₹1,00,00,000
- GST Rate: 5%
- GST Payable: ₹5,00,000
- Total Cost: ₹1,05,00,000
For affordable housing, the GST rate is 1%, while non-affordable residential properties attract 5% GST (both without Input Tax Credit). GST is applicable only on under-construction properties sold before the Completion Certificate (CC) or Occupancy Certificate (OC) is issued
Is GST applicable on resale properties?
No. GST is generally not applicable on the purchase of resale residential properties from individual owners.
Does GST apply to luxury apartments?
Yes. Under-construction luxury apartments generally attract 5% GST without Input Tax Credit, provided they are sold before the Completion Certificate or Occupancy Certificate is issued.
Where can I find premium under-construction projects in Gurgaon?
If you’re planning to invest in a premium residential property, Explore Ganga Realty Projects to discover thoughtfully designed luxury communities across Gurgaon, offering excellent connectivity, modern amenities, and long-term investment potential.
