Two identical flats, same tower, same floor plan, same price. One carries close to Rs 4 lakh of GST and the other carries none. Nothing about the building explains it. What separates them is a piece of paper issued by the municipal corporation, and whether it arrived before or after you signed.
Key takeaways
- An under-construction flat carries 5 percent GST, without input tax credit, on the whole consideration.
- A qualifying affordable home carries 1 percent, and qualifying means BOTH a price up to Rs 45 lakh and a carpet area up to 60 square metres in the metros or 90 elsewhere.
- A completed flat, one for which the completion certificate has been issued, carries no GST at all.
- Plot sales carry no GST either, because land is outside its scope.
- Input tax credit has been unavailable on residential sales since April 2019, so the builder's own tax on materials sits inside your price rather than beside it.
The rule, stated plainly
GST is a tax on supply. When a builder sells you a flat that is still being built, what they are supplying is a construction service, and that is taxable. When they sell you a finished flat, what changes hands is immovable property, and immovable property is outside GST altogether. The completion certificate is the moment the first thing becomes the second.
| What you are buying | GST rate | Input tax credit | Charged on |
|---|---|---|---|
| Under-construction flat, standard | 5 percent | Not available | The full consideration |
| Under-construction flat, affordable | 1 percent | Not available | The full consideration |
| Completed flat, OC issued | Nil | Not applicable | Nothing |
| Resale flat from an individual | Nil | Not applicable | Nothing |
| Plot of land | Nil | Not applicable | Nothing |
The affordable band is narrower than the phrase suggests, and it is the part most often got wrong, because it is two tests rather than one. The consideration must not exceed Rs 45 lakh and the carpet area must not exceed 60 square metres in the metros, a list that includes Mumbai and the whole of MMR, or 90 square metres outside them. Fail either and the rate is 5 percent. A Rs 42 lakh flat of 70 square metres in Thane is not affordable housing for this purpose, whatever the brochure says, and neither is a 55 square metre flat priced at Rs 52 lakh.
Note also which area is being measured. It is carpet area, the statutory one, not the number in the sales brochure. If those two figures are unfamiliar as distinct things, carpet, built-up and super built-up is the twenty minutes that makes the rest of this arithmetic legible.
What one certificate does to the bill
Source: Computed at the applicable rates on a Rs 80 lakh consideration. Note that a Rs 80 lakh flat cannot qualify as affordable; the middle bar shows the rate difference, not an available choice.
That middle bar carries a deliberate warning in its own caption, because the arithmetic invites a mistake. A Rs 80 lakh flat is above the Rs 45 lakh ceiling and therefore cannot be affordable housing at any carpet area. The bar exists to show what the rate difference is worth, not to suggest a Rs 80 lakh buyer has a choice about which one applies.
The third bar is the one that changes decisions. Rs 4 lakh is not a rounding difference on an Rs 80 lakh purchase; it is most of a year's EMI. It is also the clearest single reason a ready flat can be better value than its sticker price suggests, and one of several set out in resale or new booking.
Ask for the completion certificate's date, not for the word "ready". A project can be finished, occupied and still awaiting its certificate, and until that certificate exists the sale is a supply of service and GST applies. What the OC and completion certificate each certify is worth reading before you accept anyone's description of a project's stage, because the vocabulary is used loosely by people who are not being careless so much as optimistic.
The credit that is not there, and why the rate understates the tax
Before April 2019 the residential rates were higher and the builder could claim input tax credit: the GST they paid on cement, steel, fittings and contracted services offset what they collected from you. Since then the 5 percent and 1 percent rates come expressly without that credit.
The consequence is easy to state and easy to miss. The builder still pays GST on everything they buy, at rates running up to 28 percent on some materials, and can no longer recover it. That tax does not disappear; it becomes a cost, and costs are priced into the flat. So the 5 percent on your invoice is the visible tax, and there is a further quantity of embedded tax inside the price itself that no line item will ever show you.
This matters less as a grievance than as a reading habit. When comparing an under-construction price against a ready one, the under-construction figure carries 5 percent on top and an unknown amount within, while the ready figure carries neither on top. The gap between the two headline prices is not the gap between the two costs.
Neha's Mulund arithmetic
Neha (illustrative, as our stories always are) was choosing between two flats in Mulund a few weeks apart on the calendar and about Rs 3 lakh apart on price. The cheaper one was under construction with possession promised in five months. The costlier one was finished, occupied and had its completion certificate.
On the sticker she was paying Rs 3 lakh more for the finished flat. On the total she was paying about Rs 1 lakh less, because the under-construction flat added roughly Rs 4 lakh of GST that the completed one did not. She had also, without framing it as a benefit, removed the delay risk that Section 18 exists to compensate and would rather not have to use.
The point is not that ready always wins. Under-construction pricing exists because the buyer is carrying risk and time, and is often genuinely cheaper once both sides are counted properly. The point is that the comparison has to be run on the total, and GST is the single largest item that appears on one side and not the other.
Four ways buyers get this wrong
Treating the brochure's "affordable" as the tax definition. It is a marketing word almost everywhere and a two-part statutory test here.
Measuring the wrong area. The 60 and 90 square metre limits are carpet area. Super built-up will clear the threshold on paper and fail it in fact.
Assuming possession means no GST. Possession, occupation and even a housewarming do not end the liability. The certificate does.
Forgetting it exists when budgeting. GST is not part of the loan-to-value the bank funds, which means it is cash from your own pocket at exactly the moment stamp duty and registration are also due. Where each of those falls in the sequence is set out in the money timeline of buying a flat, and the neighbouring cheque, stamp duty and registration charges, lands in the same fortnight. The loan that funds the rest carries a cost of its own that moves after the purchase, and whether rate cuts ever reach it is set out in rate resets and the balance transfer arithmetic.
Can you check the builder is actually registered for it?
Reasonably asked, and harder to answer than it should be. GST collected from you is only lawfully collected by a registered supplier, and the natural place to look for a promoter's GSTIN is the project's own RERA filing, which has a field for exactly that.
The field is mostly empty. Across the 55,733 published MahaRERA projects on our September 2026 read of the register, the promoter's GSTIN appears on 11.4 percent, the corporate identity number on 3.3 percent and the LLP identification number on 1.4 percent. So for roughly seven projects in eight, the register will not confirm the number for you, and an entity-verification habit built on those fields will fail far more often than it works.
What that leaves is the invoice itself, which must carry the supplier's GSTIN, and the public GST portal, where a number can be checked against the name it belongs to. Two things are worth matching there and take a minute: that the name on the GSTIN is the same legal entity as the promoter named on the agreement and on the RERA registration, and that the rate charged matches the stage the project is actually at. A promoter selling through one entity and invoicing through another is not necessarily doing anything wrong, but it is a question worth asking before the money moves rather than after.
What the tax cannot tell you
GST tells you what stage a project is at in the eyes of the tax law. It says nothing about whether the promoter delivers, whether the possession date has already slipped twice, or whether the project carries complaints. Those are filed, publicly, and they are what the Rs 499 ReraGenie buyer report assembles for a Maharashtra project: the promoter's other registrations with the slip between promised and current completion dates, the project's own extension and complaint record, and the red flags on its registration status. A tax rate is a fact about the calendar; the filings are a fact about the builder. Look up the project first, then work out the tax.
The one-line summary
Five percent while it is being built, one percent only if it clears both the Rs 45 lakh and the carpet-area tests, nothing once the completion certificate exists, and no input credit anywhere: the tax follows the certificate, so ask for its date before you compare any two prices.
This article is educational and not tax advice. Rates and thresholds change; confirm the position applicable on your purchase date with a chartered accountant.
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