GST on Flat Purchase in India: Rates, Exemptions and a Worked Example

You have the cost sheet in front of you. The flat is ₹95 lakh, and then there is a line near the bottom that says GST, and another one under maintenance that says GST again. The sales executive says it is 'standard'. It is, mostly. But knowing which charges attract which rate can save you from paying tax you did not need to, and it changes how you compare an under-construction flat with a finished one.

Here is how GST on a home purchase works in India as of November 2026, with real numbers.

The short version: when GST applies and when it does not

• Under-construction flat: GST applies to every instalment you pay before the builder gets the completion certificate (or the home is first occupied, if that comes earlier).
• Ready-to-move flat with a completion or occupancy certificate: no GST on the price of the home. The sale is treated as a sale of immovable property, which is outside GST.
• Resale flat bought from another owner: no GST on the home price, whether it is old or nearly new.
• Plots of land: no GST on the land itself.

Stamp duty and registration are state levies. GST is never charged on them.

The two rates for under-construction homes

Since 1 April 2019, residential projects pay one of two rates. Neither rate lets the builder claim input tax credit, which is the credit businesses normally get for GST they paid on materials and services.

• 1% for affordable housing: carpet area up to 60 sq m (about 646 sq ft) in metro cities or up to 90 sq m (about 969 sq ft) elsewhere, and a price of up to ₹45 lakh. Both conditions must be met.
• 5% for everything else: any home that misses either the size or the price test.

For this rule, the metro cities are Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata and the Mumbai region. A 700 sq ft carpet-area 2BHK in Bengaluru priced at ₹42 lakh pays 5%, not 1%, because it crosses the 60 sq m limit. The same flat in Mysuru or Coimbatore could qualify for 1%.

One detail that confuses people: the law technically charges 1.5% and 7.5% and then lets the builder deduct one-third of the value as land. That is how you end up at 1% and 5% of the full agreement value. Your cost sheet should simply show 1% or 5% of the price. If it shows something higher on the flat itself, ask why.

What else on the cost sheet attracts GST

A cost sheet usually has more than one line. They are not all taxed the same way.

Car parking and preferential location charges (PLC)

When covered parking, floor rise or a corner or park-facing premium is part of the same agreement as the flat, they are generally treated as one bundled supply and take the flat's rate, 1% or 5%. Rulings have differed on parking sold separately: some advance rulings have taxed separately sold parking spaces at 18%. If parking is billed on a separate invoice or agreement, ask the builder which rate they are applying and why.

Clubhouse membership and amenity charges

These are usually billed separately and taxed at 18%. A ₹2 lakh clubhouse fee becomes ₹2.36 lakh.

Advance maintenance collected by the builder

Most builders collect one or two years of maintenance in advance at possession. This is a service, and it attracts 18% GST. The corpus or sinking fund is often treated as a refundable deposit rather than a fee, but practice varies, so check what your builder's invoice shows.

Monthly maintenance after the association takes over

Once a residents' welfare association (RWA) manages the building, GST at 18% applies only if both of these are true: a member's monthly contribution is above ₹7,500, and the association's annual turnover is above ₹20 lakh. The government's position since a July 2019 circular is that once the ₹7,500 limit is crossed, GST is due on the whole amount, not just the excess. A 2021 Madras High Court ruling said only the excess should be taxed, but that ruling was stayed on appeal, so most associations still follow the full-amount approach.

Charges with no GST

• Stamp duty and registration fees
• Electricity and water connection deposits paid to the utility (BESCOM and BWSSB in Bengaluru), when passed through at actual cost
• Property tax

Your home loan processing fee does attract 18% GST, since it is a financial service.

Worked example: a ₹95 lakh flat in Bengaluru

Say you book a 1,300 sq ft (super built-up) 3BHK in an under-construction project. The carpet area is well above 60 sq m, so the 5% rate applies.

• Flat, including ₹3 lakh PLC and ₹4 lakh covered parking in one agreement: ₹95,00,000 × 5% = ₹4,75,000
• Clubhouse membership: ₹2,00,000 × 18% = ₹36,000
• Two years' advance maintenance at ₹5 per sq ft: ₹1,56,000 × 18% = ₹28,080
• Stamp duty and registration: no GST

Total GST: about ₹5,39,080. That is a real number to add to your budget, and most home loans will not cover all of it, since lenders fund a share of the property cost and some exclude separately billed charges.

Now say you buy a similar flat in a completed project that already has its completion certificate. GST on the ₹95 lakh home price: zero. You would still pay 18% on clubhouse and advance maintenance if those are billed. So the GST difference on the home itself is ₹4.75 lakh. That gap is one reason ready flats can look pricier per square foot but cost about the same once tax is included.

The affordable case

A 55 sq m (about 592 sq ft) carpet-area 2BHK in Bengaluru at ₹42 lakh meets both tests. GST at 1% is ₹42,000. At 5% it would have been ₹2.1 lakh. If you are close to the limits, ask the builder for the exact RERA carpet area in writing before you book.

Timing matters: GST stops at the completion certificate

GST is due on money paid before the completion certificate is issued. Anything paid after it should be free of GST on the home price. In practice, many builders schedule the last instalment just before the certificate, so most buyers pay GST on nearly the whole amount. Two things to check:

1. Look at the payment plan. If a sizeable final instalment falls after the expected completion date, you may save GST on it.
2. If the builder raises a demand after the completion certificate is out, it should not carry GST on the home price. Ask for the certificate date and compare.

Did GST 2.0 change anything for homebuyers?

The GST rate changes that took effect on 22 September 2025 cut GST on cement from 28% to 18% and lowered it on several other building materials. The rates on flats themselves did not change: 1% and 5% still apply. Because builders cannot claim input tax credit, cheaper materials can lower their costs, but whether that reaches your price depends on the builder and the market. Do not expect a line item that says 'GST 2.0 discount'.

If you are weighing an under-construction flat against a ready one, Skyros Estates can help you compare the full, tax-inclusive cost of RERA-verified options side by side.