GST on a flat: under construction versus ready

GST on a flat bought from a builder turns on one date: the completion certificate, or first occupation if that comes earlier. If any part of the price is paid before it, GST applies, at 5% of the total price, or 1% for an "affordable" flat. If every rupee is paid after it, there is no GST.

The date decides

The same flat, at the same price, can carry a tax bill or none, depending on when you paid for it. The Central GST Act treats construction of a building meant for sale as a supply of a service, except where the entire consideration is received after the completion certificate is issued, or after first occupation, whichever is earlier.

Read that exception closely. It needs the entire price to come after the certificate. A booking amount paid while the building is still going up is enough to bring the sale inside GST.

The two rates, and what "without input credit" means

For a residential flat being built by a promoter, the notification sets two effective rates.

Neither rate comes with input tax credit: the builder cannot set the GST it paid on cement, steel and services against the GST it collects from you.

These rates apply to projects begun on or after 1 April 2019, and to older ones whose builder did not choose to stay on the earlier rates. The general GST rate changes that took effect on 22 September 2025 left them untouched: the September 2025 amendment to this part of the notification changed other items only.

Why the notification says 7.5% but the bill says 5%

GST does not reach land. The price of a flat, though, includes your share of the land under it. Rather than ask what that share really cost, the rule deems the land to be one-third of the total amount charged and taxes only the remaining two-thirds.

So the rate in the notification is applied to two-thirds of your price:

• Any other flat: 7.5% × ⅔ = 5% of the price (3.75% central tax and 3.75% state tax, on two-thirds).
• "Affordable" flat: 1.5% × ⅔ = 1% of the price (0.75% central and 0.75% state, on two-thirds).

The "total amount" is everything charged for the construction plus the land or your undivided share of it. A demand letter may show "5% of the price" or "7.5% of two-thirds"; they are the same number.

1% or 5%: two tests, both required

"Affordable" here is a definition in the notification, not a word from an advertisement.

1. Carpet area up to 90 square metres, about 969 square feet, in Indore. The limit is 60 square metres only in the metropolitan areas the notification names: Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata and Mumbai. Indore is not on that list. Carpet area here means carpet area as RERA defines it, explained in our guide to carpet, built-up and super built-up area.
2. Gross amount up to ₹45 lakh, counting everything charged for the flat: the price, the land share, and extras such as preferential location, development, parking and common-facility charges.

Both pass: 1%. Either fails: 5%.

Worked through, with invented numbers

One ₹60 lakh flat, bought on two timelines. Every figure is made up for the illustration.

And an "affordable" flat: ₹36 lakh, 85 square metres of carpet, in Indore, booked while being built. Two-thirds is ₹24 lakh; 1.5% of that is ₹36,000, which is 1% of the price.

Stamp duty and the registration fee are a separate state levy on the sale deed, paid at the registry in both columns.

Three purchases with no GST at all

• A finished flat paid for after the certificate. Every rupee after completion or first occupation.
• A resale from the owner. A completed flat sold on by the person who owns it is a sale of a building, which the Act keeps outside GST.
• Land. It stays a sale of land even after levelling or laying drainage, water or power lines.

One caution on plots. Development work supplied as a separate service, such as levelling or laying drains, is taxed at its own rate. If a plot's price is split into "land" and "development charges", ask a chartered accountant how the second line is taxed.

Five questions before the next instalment

1. Has the completion certificate been issued, and when? That date settles whether there is any GST to pay; our guide to occupancy and completion certificates explains the paper.
2. Was any of my money paid before that date? Even the booking amount is enough.
3. Is GST shown on its own line, and at what rate? Expect 5% or 1% of the price, which may be written as 7.5% or 1.5% of two-thirds.
4. Why is this flat taxed at that rate? Get its carpet area and gross amount from the builder in writing.
5. What is the project's MP RERA registration number? Look the record up yourself rather than taking a printout.

Questions people ask

Is GST applicable on ready to move flats?

Not if the entire price is paid after the completion certificate is issued or after first occupation, whichever is earlier. If any amount, even a booking amount, was paid before that date, GST applies.

What is the GST rate on under construction flats in 2026?

5% of the total price for a residential flat, or 1% for an affordable one, both without input tax credit. The rates were unchanged by the rate revision of 22 September 2025 and are current as of October 2026.

What is an affordable flat for GST in Indore?

One with a carpet area up to 90 square metres and a gross amount up to ₹45 lakh. Both tests must pass. The 60 square metre limit applies only in six named metropolitan areas, and Indore is not one of them.

Why is GST 5% when the notification says 7.5%?

One-third of the price is treated as land, and land is outside GST. 7.5% on the remaining two-thirds equals 5% of the whole price.

Where the facts come from. The facts and figures in this post come from verified government sources and verified RERA-registered brokers.

Indori Zameen is a private platform. It is not a government body and is not affiliated with one — always confirm a record with the concerned authority before you commit money.