GST is one of the largest single line items on an under-construction purchase, and one of the most misunderstood. The rule that matters most is simple: it depends on whether the building has its completion certificate.
The dividing line
If a property receives its completion or occupancy certificate before you buy, the sale is treated as a transfer of immovable property and no GST applies. If you buy before that certificate is issued, you are buying a service — construction — and GST applies.
This single fact explains most of the confusion. Two buyers in the same building can face completely different GST positions depending on when they signed.
The rates
For residential property, the concessional scheme applies at 5% without input tax credit for non-affordable housing, and 1% without ITC for affordable housing as defined by carpet area and price thresholds.
The older regime charged 12% with input tax credit available to the developer. Most residential projects moved to the lower rates without credit.
What GST is charged on
The construction value, not the land. The standard approach deems one-third of the total consideration to be land value and excludes it, with GST applying to the remaining two-thirds. That is why the effective rate on your total payment is lower than the headline rate.
What GST is not charged on
Stamp duty and registration — those are state levies, entirely separate, and GST does not apply to them. Nor does GST apply to the resale of a completed flat between two individuals.
Where buyers get caught
Assuming the quoted price includes it. Always ask whether a price is inclusive or exclusive of GST. On a ₹1.5 crore purchase the difference is substantial.
Not checking the completion certificate date. If a project is close to completion, the timing of your purchase materially changes your cost.
Confusing it with the maintenance GST. Monthly maintenance above a threshold attracts GST separately, at a different rate, and that continues for as long as you own.
What to ask for
An invoice showing the GST component separately, with the developer's GSTIN. You need this for your records, and for any future claim.
A caveat
Rates and thresholds change with Council decisions. Confirm the current position with a chartered accountant before budgeting — this note describes the structure, not a guarantee of today's rate.
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