--- title: "New GST on Under Construction Property 2026: 5% Rate on Flats" description: "New GST rate on under-construction homes in 2026 is 5% on all residential flat purchases. Stay GST-compliant with Busy and apply the correct rate automatically." canonical: "https://busy.in/gst-rates/under-construction-property/" author: "Hitesh Aggarwal" published: "2025-05-15T10:51:04.000Z" category: "GST Rates" --- - GST applies to under-construction properties, but not after a Completion or Occupancy Certificate is issued. - The new GST rates are 1% for affordable housing and 5% for other residential flats under construction. - Ready-to-move-in flats with an Occupancy Certificate have a 0% GST rate. - Commercial properties under construction have a 12% GST rate with Input Tax Credit available. - Mixed-use buildings have different GST rates: 1% or 5% for residential and 12% for commercial parts. # New GST on Under Construction Property: What Buyers Should Know 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. ## Is GST Applicable on Under Construction Property? 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. **Get a Free Trial –** [**Best Accounting Software For Small Business**](https://busy.in/accounting-software/) ## New GST Rate on Construction Property in India The Government of India is updating GST rates effective after **22 Sep 2025**. Below are the **expected new GST rates** for Construction Property and related outerwear (no compensation cess). | Type of Property | New 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 | ## GST Rates for Residential Property | Type of Property | Old 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:** - Carpet area: up to 60 sq. m. in metro cities or 90 sq. m. in non-metros - Property value: up to ₹45 lakhs This means **gst for under construction flat** is 1% if it qualifies as affordable housing, and 5% otherwise. **Get a Free Demo of –** [**Real Estate Accounting & Billing Software**](https://busy.in/accounting-software/real-estate/) Live Demo Available Today ## Register Under-Construction Property as a Fixed Asset in BUSY Trusted by 6,00,000+ Users 4.6 Google Rating ## GST on Apartments Under Construction All types of apartments—whether luxury or budget—are covered under GST when sold before completion. The **gst on apartments under construction** is: - 5% for standard units - 1% for affordable units The builder cannot claim [**Input Tax Credit (ITC)**](https://busy.in/gst/what-expenses-can-be-claimed-as-itc/) under the new GST regime (post-April 2019). So, all project-related GST costs are absorbed in the base selling price. ## Old GST on Commercial Property Under Construction ### (Old GST Rates – Applicable Until 21st September) For commercial properties like offices, shops, or retail units under construction, the applicable GST rate is: - **12% with Input Tax Credit** This applies to: - Commercial buildings - Business parks - Co-working spaces - Under construction malls or showrooms So, the **gst on commercial property under construction** is higher, but allows ITC claims, which can benefit businesses in the long run. ## GST on Under Construction Buildings (Mixed Projects) Builders working on mixed-use buildings—for example, residential towers with retail shops on the ground floor—must apply different GST rates: - **Residential portion:** 1% or 5% (based on classification) - **Commercial portion:** 12% with ITC Correct documentation and bifurcation in invoicing are essential to ensure GST is applied properly to each unit. **Get a Free Trial –** [**Best GST Accounting Software For Small Business**](https://busy.in/accounting-software/gst-accounting/) ## When is GST Not Applicable? You won’t pay GST if: - You buy a completed property after the Occupancy/Completion Certificate is issued - You buy land (GST does not apply to land sales) - You purchase from a seller who is not a builder (resale property) ## Conclusion 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. ## About the author **Hitesh Aggarwal** As a Chartered Accountant with over 12 years of experience, I am not only skilled in my profession but also passionate about writing. I specialize in producing insightful content on topics like GST, accounts payable, and income tax, confidently delivering valuable information that engages and informs my audience. ## Frequently asked questions ### Is GST charged on all under-construction flats? Yes. GST for under construction flat is charged at **1%** (affordable) or **5%** (others). ### What is the GST on under construction buildings with shops and flats? Residential units attract **1%/5%**, and shops attract **12%** GST with ITC. ### Can I claim ITC if I buy a flat under construction? No. Buyers cannot claim Input Tax Credit on under-construction flats post-April 2019. ### What is the GST on commercial property under construction? It is **12%** with ITC available. ### Is GST applicable on resale flats or ready-to-move-in homes? No. If the property has a Completion Certificate, GST is not applicable. ## Related articles - [New GST on Skincare Products: Rate, Branding & Retail Pricing](https://busy.in/gst-rates/skincare-products/) - [New GST on Industrial Machinery: Slabs, ITC & MSME Effect](https://busy.in/gst-rates/industrial-machinery/) - [New GST on Restaurant Meals: Dine-in, Takeaway & Delivery Compared](https://busy.in/gst-rates/restaurant-meals/) - [New GST on Kitchen Utensils: What’s Taxed and What’s Not?](https://busy.in/gst-rates/kitchen-utensils/) - [New GST on Online Education: Rate, Exemptions & EdTech Impact](https://busy.in/gst-rates/online-education/) - [New GST on Packaging Materials: Tax Implication Across Industries](https://busy.in/gst-rates/packaging-materials/) - [New GST on Digital Marketing Services: Tax Rates & Input Credit Explained](https://busy.in/gst-rates/digital-marketing-services/) - [New GST on Pesticides: Rates, Agri-Exemptions & Sector Impact](https://busy.in/gst-rates/pesticides/) - [New GST on Butter: From Dairy to Dining – What You Pay](https://busy.in/gst-rates/butter/) - [GST on Honey: Rate, Applicability & Industry Outlook](https://busy.in/gst-rates/honey/)