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If you’re planning to buy a house or office space that’s still being built, it’s important to understand how GST affects the final cost. This blog will simplify everything about gst on under construction property, including how rates vary for different types of projects.
Yes. GST is applicable when you purchase a flat, apartment, or commercial space that is still under construction. The GST is calculated on the sale value of the property (excluding land cost).
Once the building is complete and the builder obtains a Completion Certificate (CC) or Occupancy Certificate (OC), no GST is charged on the sale.
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| Type of Property | GST Rate | Input Tax Credit (ITC) |
|---|---|---|
| Affordable housing (under construction) | 1% | Not available |
| Other residential flats (under construction) | 5% | Not available |
| Ready-to-move-in flats (with OC) | 0% | Not applicable |
Criteria for Affordable Housing:
This means gst for under construction flat is 1% if it qualifies as affordable housing, and 5% otherwise.
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All types of apartments—whether luxury or budget—are covered under GST when sold before completion. The gst on apartments under construction is:
The builder cannot claim Input Tax Credit (ITC) under the new GST regime (post-April 2019). So, all project-related GST costs are absorbed in the base selling price.
For commercial properties like offices, shops, or retail units under construction, the applicable GST rate is:
This applies to:
So, the gst on commercial property under construction is higher, but allows ITC claims, which can benefit businesses in the long run.
Builders working on mixed-use buildings—for example, residential towers with retail shops on the ground floor—must apply different GST rates:
Correct documentation and bifurcation in invoicing are essential to ensure GST is applied properly to each unit.
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You won’t pay GST if:
Understanding the gst on under construction property helps you calculate the actual cost of your dream home or office space. Always check the builder’s GST registration and ensure you receive a valid invoice to stay fully compliant.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.