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GST on under-construction property: how it stacks with stamp duty

GST applies when a flat is under construction. Stamp duty applies always. Together they can add 8 to 13 percent to the cost of an under-construction flat — and a lot of buyers don't fully account for both.

Last updated: 19 May 2026

Stamp duty is a state tax. GST is a central tax. They apply at different stages of the same property purchase, on different bases — and many buyers, looking at a flat brochure, don't budget for both.

This guide covers when GST applies, the current rates, how it differs from stamp duty, and how the two charges combine for a typical under-construction purchase.

When GST applies (and when it doesn't)

GST on real estate applies only to under-construction property — meaning the builder has not yet received the Completion Certificate (CC) or Occupancy Certificate (OC) at the time of the sale.

Once the CC/OC is issued, the flat is "ready-to-move-in" and is treated as immovable property, not a service. GST does not apply. Stamp duty still does.

So:

  • Under-construction flat → GST (5% or 1%) + Stamp duty + Registration fee
  • Ready-to-move flat → Stamp duty + Registration fee only
  • Resale flat (any age) → Stamp duty + Registration fee only. The CC/OC was issued in the past; GST does not apply on resale.
  • Land / plot → Stamp duty + Registration fee only. GST does not apply to pure land sales.

Current GST rates (revised April 2019)

  • Affordable housing — 1% (effective), no ITC. Affordable is defined as:
    • Carpet area up to 60 sqm (≈ 645 sqft) in metros — Delhi NCR including Gurgaon/Noida/Greater Noida/Faridabad/Ghaziabad, Mumbai MMR, Chennai, Hyderabad, Bengaluru, Kolkata
    • Carpet area up to 90 sqm (≈ 968 sqft) elsewhere
    • Property value up to ₹45 lakh (both metros and non-metros)
  • Non-affordable housing (everything else) — 5% effective, no ITC.
  • Commercial property — 12% with ITC.

These rates are computed on the consideration (the builder's sale price), not the circle rate / locality value. So GST and stamp duty are sometimes computed on different bases for the same flat.

What "no ITC" means

Before April 2019, builders could claim Input Tax Credit (ITC) — the GST they paid on cement, steel, contractor services, etc. — and offset that against the GST charged on the flat. The earlier GST rate was 8% (affordable) and 12% (others), with ITC.

The 2019 reform reduced the headline rate to 1% / 5% but removed ITC. Builders now pay GST on their inputs and cannot recover it; they typically build the cost into the flat price. The effective cost to the buyer is similar, but the headline rate is lower.

Worked example — under-construction flat in MP

Take a 1,000-sqft (built-up) under-construction flat in Bhopal at ₹50 lakh consideration. Locality DLC rate values it at ₹52 lakh. Buyer is male, individual.

  • GST: 5% of ₹50 lakh (consideration) = ₹2.5 lakh
  • Stamp duty: 7.5% of ₹52 lakh (higher of consideration / DLC) = ₹3.9 lakh
  • Registration fee: 3% of ₹52 lakh = ₹1.56 lakh
  • Total taxes / fees: ₹7.96 lakh
  • As a percentage of the headline price: ~16% of ₹50 lakh

A buyer who only budgets for stamp duty and registration is short ₹2.5 lakh on the GST line. Conversely, a buyer who walks into a ready-to-move flat saves the GST entirely — a real reason to consider RTM properties as financially comparable to under-construction ones, even at a higher headline price.

Worked example — ready-to-move flat, same parameters

Same flat, but the builder has received the OC before you sign.

  • GST: ₹0
  • Stamp duty: ₹3.9 lakh
  • Registration fee: ₹1.56 lakh
  • Total taxes / fees: ₹5.46 lakh

₹2.5 lakh saved — purely by waiting for OC before registering.

Pre-sale agreements and the OC question

A common scenario: you book a flat in an under-construction project, pay an advance, and sign a pre-sale agreement. The sale deed execution happens later when construction completes. Whether GST applies depends on the date of the sale deed execution relative to the OC date — not the booking date.

If the sale deed is executed before OC, GST applies. If you can time the deed execution to after OC, GST does not. Some buyers explicitly negotiate this with the builder for the savings, though most builders prefer to register pre-OC to lock in the sale.

GST is not refundable

Unlike stamp duty, where there is a refund mechanism if a transaction falls through, GST paid to a builder is not refundable from the government — it is the builder's liability, and your contractual position with the builder governs whether they refund you. Usually they don't, or they refund net of their own GST and TDS deductions. Read the cancellation clause in your booking agreement.

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