New GST on Under Construction Property: What Buyers Should Know
- The gst on commercial property under construction is generally 12% with eligible Input Tax Credit (ITC), subject to applicable GST provisions and project classification.
- The gst on under construction commercial property depends on the type of project and applicable GST rules. Commercial properties supplied before completion certificate generally attract GST.
- GST applies to under-construction properties, but completed properties with a Completion Certificate or Occupancy Certificate issued are generally outside the scope of GST.
- GST rates for residential flats under construction are 1% for affordable housing and 5% for other residential apartments, subject to applicable conditions.
- Mixed-use projects may have different GST rates depending on the residential and commercial components and applicable GST classification.
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.
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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.
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GST Rates for Residential Property
| Type of Property | GST Rate From 22 Sep 2025 | Rate Before 22 Sep 2025 | Input Tax Credit (ITC) |
|---|---|---|---|
| Affordable housing (under construction) | 1% | 1% | Not available |
| Other residential flats (under construction) | 5% | 5% | Not available |
| Ready-to-move-in flats (with OC) | Outside GST scope | Outside GST scope | Not applicable |
Type of Property
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Input Tax Credit (ITC)
Type of Property
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Input Tax Credit (ITC)
Type of Property
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Input Tax Credit (ITC)
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.
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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) under the new GST regime (post-April 2019). So, all project-related GST costs are absorbed in the base selling price.
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.
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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.
