GST on Flats in Mumbai: Why an Under-Construction Flat Costs More Than Its Price Tag
Under-construction flats attract 5% GST, or 1% for affordable homes, with no input tax credit. Ready flats with an occupancy certificate attract none. How it adds up.
Two flats in the same building, same size, same floor. One is ready, one is still being built, and the under-construction one looks cheaper. Before you decide, add GST. It often closes the gap.
What is the GST rate on an under-construction flat?
Since 1 April 2019, GST on residential flats has been (Piramal Realty):
| Type | GST |
|---|---|
| Affordable housing | 1%, without input tax credit |
| Other residential flats | 5%, without input tax credit |
| Ready flat with occupancy certificate | No GST |
What counts as affordable housing for GST?
Both conditions must be met: a carpet area of up to 60 sq m in metro cities such as Mumbai (90 sq m elsewhere), and a total price of up to Rs 45 lakh. In Mumbai, very few new flats meet the price limit, so most buyers pay 5%.
Is there GST on a ready-to-move flat?
No. Once the building has its occupancy certificate (or completion certificate), the sale is of a completed property and GST doesn't apply. You still pay stamp duty and registration either way; see our guide to stamp duty in Mumbai.
How much GST will I pay on a Rs 1 crore flat?
On a non-affordable under-construction flat, budget roughly Rs 5 lakh of GST on Rs 1 crore of payments, charged as you pay each instalment. A ready flat with an OC at the same price would have no GST.
Compare under-construction and ready flats on the full cost, GST and waiting time included, not on the price list.
Things that don't attract the same GST
- Stamp duty and registration are state charges, separate from GST.
- Society maintenance after possession has its own GST rule; see GST on society maintenance.
- Rent on a residential flat let to an individual for living is exempt from GST.
Under-construction or ready: how to decide
- Ready flat: no GST, no construction risk, you can move in or let it immediately. Check the OC; see our post on buying without an OC.
- Under-construction: a lower headline price and staggered payments, but 5% GST, possible delays, and no rent or use until possession. Check the MahaRERA timeline and the developer's record; our post on MahaRERA recovery shows why.
What this means for you
- Buyers: compare total cost with our buyer's tool hub and see new projects alongside ready listings.
- NRI investors: a ready flat starts earning rent immediately, which an under-construction flat can't.
Frequently asked questions
What is the GST on an under-construction flat in Mumbai?
5% without input tax credit for non-affordable flats, and 1% for affordable housing.
Is there GST on a ready-to-move flat?
No. Flats sold after the occupancy or completion certificate don't attract GST.
What is affordable housing for GST?
A flat with carpet area up to 60 sq m in metro cities, or 90 sq m elsewhere, and a price of up to Rs 45 lakh.
Related reading
Weighing a ready flat against a new launch? Book a video call or WhatsApp me.
Warmly,
Yanik
General information, not tax advice.
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