GST on Under-Construction Property in India (2026)
GST rates on under-construction property in India: 5% standard rate, 1% affordable housing, ITC rules, and how GST impacts your total property cost.
title: "GST on Under-Construction Property in India (2026)" tag: "Tax & Legal" category: "Tax & Legal" description: "GST rates on under-construction property in India: 5% standard rate, 1% affordable housing, ITC rules, and how GST impacts your total property cost." readTime: "9 min" views: "4.4K" publishedAt: "2025-10-28" primaryKeyword: "gst under construction property india" secondaryKeywords:
- "gst rate flat 2026"
- "gst affordable housing india"
- "gst impact property price" tags:
- "Tax & Legal"
- "GST"
- "Under Construction"
GST Rates on Property (2026)
| Property Type | GST Rate | ITC Available? |
|---|---|---|
| Under-construction (non-affordable) | 5% | No |
| Under-construction (affordable housing) | 1% | No |
| Ready-to-move (with OC) | 0% | N/A |
| Commercial property (under construction) | 12% | Yes |
| Plots / Land | 0% | N/A |
What Qualifies as Affordable Housing?
Properties that meet BOTH criteria:
- Carpet area up to 60 sq mt in metros (90 sq mt in non-metros)
- Price up to Rs 45 lakhs
Metros defined as: Mumbai, Delhi, Bangalore, Hyderabad, Chennai, Kolkata, and their surrounding development authority areas.
How GST Affects Your Total Cost
GST is charged on the agreement value minus land component. The land component is typically calculated as one-third of the total value.
Example: Rs 1 Cr under-construction flat:
- GST applicable on: Rs 66.67L (two-thirds of Rs 1Cr)
- GST at 5%: Rs 3.33L
- Stamp duty (6% on Rs 1Cr): Rs 6L
- Total government charges: Rs 9.33L
Same flat, ready-to-move with OC:
- GST: Zero
- Stamp duty (6% on Rs 1Cr): Rs 6L
- Total government charges: Rs 6L
Saving with ready-to-move: Rs 3.33L
ITC (Input Tax Credit) Removal
Since April 2019, builders cannot claim Input Tax Credit on under-construction projects. This means the 5% GST is a final rate with no credit pass-through to buyers. Previously, builders charged 12% with ITC, and the effective rate was often lower.
When GST Is Not Applicable
- Ready-to-move property with Occupation Certificate (OC)
- Resale property (secondary market)
- Land purchase
- Stamp duty and registration charges (separate from GST)
Impact on Buying Decision
| Factor | Under-Construction | Ready-to-Move |
|---|---|---|
| GST | 5% on construction value | None |
| Price | 10-20% lower (typically) | Market rate |
| Risk | Delivery delay, quality | What you see is what you get |
| Total effective cost | May be similar after GST | No hidden charges |
Use our Stamp Duty Calculator to estimate your total acquisition cost including stamp duty. Book a consultation for purchase planning.
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