GST on Under-Construction Apartments 2026: Complete Buyer Guide
GST rates, affordable housing thresholds and income-tax deduction limits quoted here are indicative for 2026 — verify the applicable rates with your chartered accountant and the builder before signing any agreement.
GST is one of the most misunderstood costs in a home purchase on Sarjapur Road. Buyers often see a per-sq-ft price and only discover the 5% GST charge at the first demand letter, or they confuse the rates that applied before April 2019 (12% and 8% with input tax credit) with the current flat rates (5% and 1% without ITC). This guide explains what GST applies to, when it does not apply, how the affordable-housing threshold works, and what to verify in your builder agreement so there are no surprises once construction begins.
GST on Residential Property — At a Glance
| Item | GST Rate (2026) | Notes |
|---|---|---|
| Under-construction flat (non-affordable) | 5% without ITC | On agreement value; applies until Occupancy Certificate is issued |
| Affordable housing (₹45L and 60 sqm metro limit) | 1% without ITC | Both price and carpet area limits must be met simultaneously |
| Ready-to-move flat (OC issued before sale) | Nil | Sale of immovable property; not treated as supply of goods or services |
| Car parking (included in flat sale) | Same as flat (5% or 1%) | Parking sold separately from the flat may attract 18% |
| Club membership / one-time amenity charge | 18% | Treated as a service, not part of the residential supply |
| Maintenance corpus (refundable) | Generally exempt | Refundable corpus held in trust; periodic maintenance levy after possession taxable at 18% |
| Home-loan processing fee (bank) | 18% on the fee | Bank charge, not builder charge; not related to the property GST |
Rates indicative, as of July 2026 — verify with your chartered accountant and builder before signing.
When GST Applies and When It Does Not
The core rule is straightforward: GST applies when you buy from a developer while the building is still under construction. It does not apply once the developer has received the Occupancy Certificate (OC) — the document issued by the BBMP or BDA in Bengaluru certifying that the building is complete and fit for habitation. If the OC is in hand before your booking or agreement date, you are buying immovable property, not a service, and GST does not apply.
If you book in a project where construction is ongoing or not yet started, GST is charged on each payment you make to the builder. At every construction-linked milestone (booking, foundation, plinth, slabs, brickwork, finishing, possession), the builder issues a GST tax invoice at the applicable rate and deposits the tax with the government. If you buy a resale flat from a previous owner, GST does not apply at all — resale transactions between individuals are transfers of immovable property, not supplies under the GST framework, regardless of the project's age.
Affordable Housing Rate: The 1% Bracket
A residential unit qualifies for the 1% GST rate only if two conditions are met simultaneously: the total consideration (the full amount payable to the builder, not just the per-sq-ft rate) must not exceed ₹45 lakh, and the carpet area must not exceed 60 sq m in a metropolitan city. Bengaluru is classified as a metropolitan city for this purpose.
On Sarjapur Road in 2026, mid-segment and premium 2 BHK and 3 BHK apartments from established builders are typically priced well above ₹45 lakh, which means the 1% rate is unlikely to apply to most purchases on this corridor. The 1% bracket is more relevant to genuinely affordable projects in outer Bengaluru micro-markets. If a sales team tells you a flat on Sarjapur Road qualifies for 1% GST, ask them to confirm both the total consideration and the exact carpet area of your specific unit in writing before booking.
No Input Tax Credit: How the Rates Changed in 2019
Before April 2019, GST on under-construction homes was 12% for non-affordable housing and 8% for affordable housing — but builders could claim input tax credit (ITC) on GST paid for construction materials, services and subcontractors, and were required to pass this ITC benefit to buyers. In practice the scheme was complex to administer and the benefit was inconsistently passed through.
From April 2019, the rates were revised to 5% and 1% without ITC. Builders can no longer claim ITC on residential projects; buyers cannot receive it. The net effective rate depends on the project's construction-cost composition, but the revised rates are simpler to track: you pay 5% of the agreement value (or 1% for qualifying affordable housing), the builder deposits it with the government, and there is no ITC trail to follow. If you see any marketing material citing 12% GST or 8% GST on a current new-launch project, those figures are outdated and should be queried with the builder.
GST on Parking, Club Membership and Other Charges
Parking allotted as part of the flat sale — one covered space included in the total agreement value — is generally taxed at the same rate as the flat (5% or 1%). If parking is sold as a distinct line item separate from the flat, it may be treated as a separate supply and attract 18%. The treatment depends on how the builder structures the Agreement to Sell, so check how parking is described and priced in your specific agreement.
Club membership fees and one-time amenity charges are treated as services, separate from the residential property supply, and typically attract GST at 18%. Maintenance corpus deposits — a lump sum paid at handover and held by the builder or maintenance company in a refundable corpus — are generally exempt because they are held in trust. However, ongoing maintenance charges billed after you take possession (monthly society levies, annual maintenance contracts) are taxable services and attract 18% GST as maintenance services.
How GST Is Calculated in Your Agreement
GST is applied to the agreement value: the total amount payable to the builder under the Builder Buyer Agreement (BBA) or Agreement to Sell. This includes the base price, floor rise, preferential location charges (PLC) and other builder-side charges, but excludes stamp duty and registration (which go to the sub-registrar) and charges paid directly to third parties such as home-loan processing fees.
At each payment milestone, the builder issues a GST tax invoice showing the base amount, the applicable rate and the GST amount separately. Retain all GST invoices — they are part of your cost-of-acquisition record. The total GST paid over the construction period forms part of your indexed cost of acquisition when you calculate capital gains on a future sale, reducing your taxable gain.
At the July 2026 Sarjapur Road preview event for Godrej Verano, the single most common question buyers asked the sales team was whether the quoted per-sq-ft price included or excluded GST. Confirming this in writing before paying the booking amount takes 30 seconds and prevents a material miscalculation on an already substantial purchase.
GST and Stamp Duty: Two Separate Costs
A complete cost model for an under-construction flat on Sarjapur Road must include both GST and stamp duty plus registration, which are entirely separate taxes paid to different authorities at different stages. GST is a central and state tax collected by the builder at each milestone and forwarded to the government. Stamp duty and registration are state taxes paid directly to the sub-registrar at the time the sale deed is registered (not at Agreement to Sell stage).
In Karnataka in 2026, stamp duty is levied on the guidance value or agreement value (whichever is higher) at 5% for most properties on Sarjapur Road, with a cess and surcharge that brings the effective rate to approximately 5.5–5.65% for properties above ₹45 lakh. Registration is a further 1%. The stamp duty bands, guidance value process and sub-registrar documentation are covered in detail in the home loan and stamp duty guide. The combined government tax outgo on an under-construction purchase at ₹1.5 crore is roughly 5% GST + 6.5% stamp duty and registration = approximately ₹17.25 lakh (indicative; verify with your sub-registrar and chartered accountant).
What to Check Before You Book
- Inclusive or exclusive: Confirm in writing before paying the booking amount whether the quoted price includes or excludes GST.
- Builder GSTIN: Verify the builder's GST Identification Number is valid and active. Every GST tax invoice at a payment milestone must show the GSTIN and the tax amount separately.
- Rate applied: The rate on your invoice should match your unit's category — 5% for non-affordable, 1% for affordable. If you are told 1% applies, verify the total consideration and the carpet area of your specific unit against the limits.
- Parking and amenity GST: Check whether parking is included in the agreement value or sold separately, and what GST rate the builder applies to club membership, amenity charges and maintenance corpus.
- Retain all invoices: GST tax invoices issued at each milestone form part of your cost-of-acquisition record and are relevant for capital-gains calculation on a future sale.
- OC timing: If the builder receives an OC before your final payment milestone, the GST treatment of that final payment may change. Clarify how the BBA handles OC issuance mid-payment schedule.
- Chartered accountant review: Have your CA review the tax structure in the BBA before signing, particularly if you are buying jointly, if the unit is for rental, or if you intend to claim home-loan deductions under Sections 24(b), 80C or 80EEA.
Frequently Asked Questions
1.Do I pay GST on a ready-to-move apartment in Bengaluru?
No. If the builder has received the Occupancy Certificate before the date of your booking or agreement, the transaction is treated as a sale of immovable property and GST does not apply. GST applies only while construction is ongoing. A ready-to-move flat with an OC already in hand saves you 5% (or 1% for affordable units) compared with an equivalent under-construction flat from the same builder.
2.What is the GST rate on under-construction flats in 2026?
The standard rate is 5% of the agreement value without input tax credit for non-affordable residential units. The rate is 1% for units that qualify as affordable housing — broadly, a flat with a total consideration of up to ₹45 lakh and a carpet area of up to 60 sq m in a metropolitan city such as Bengaluru. Both rates exclude stamp duty and registration, which are payable separately to the sub-registrar at the time of sale deed registration.
3.What qualifies as affordable housing for GST purposes?
Under the GST rules applicable in 2026, an affordable residential unit must satisfy two conditions at the same time: the total consideration must not exceed ₹45 lakh, and the carpet area must not exceed 60 sq m in a metropolitan city (Bengaluru is a metro) or 90 sq m in a non-metropolitan city. Both conditions must be met — a unit priced at ₹40 lakh but with a carpet area of 70 sq m in Bengaluru would not qualify for the 1% rate.
4.Is GST included in the price a builder quotes per sq ft?
This varies by builder and the stage of the marketing process. Some builders quote all-inclusive prices while others quote a base price to which GST is added separately. Your booking form and Agreement to Sell will state whether the agreed value is inclusive or exclusive of GST, and the GST amount will appear separately on each milestone invoice. Always confirm which basis applies before you pay the booking amount — a 5% difference on ₹1.5 crore is ₹7.5 lakh.
5.Can I claim the GST I pay on my flat purchase as an income-tax deduction?
No. GST paid on a residential flat purchase is not deductible under any section of the Income Tax Act. The deductions available to home buyers are on principal repayment (Section 80C, up to ₹1.5 lakh per year), on home-loan interest for a self-occupied property (Section 24(b), up to ₹2 lakh per year), and for eligible first-time buyers under Section 80EEA (additional interest deduction, subject to conditions). GST paid, however, is part of your cost of acquisition and increases the indexed cost when calculating long-term capital gains on a future sale.
Conclusion
GST on an under-construction apartment is 5% for non-affordable units and 1% for qualifying affordable housing, payable to the builder at each construction milestone and not applicable to ready-to-move flats with an OC in hand. It is separate from stamp duty and registration, which add another approximately 6.5% in Karnataka, and is not deductible as an income-tax expense. The two things to confirm before you sign: whether the price quoted is inclusive or exclusive of GST, and whether your specific unit could qualify for the 1% affordable rate based on both the total consideration and the carpet area. For current pricing on Godrej Verano, visit the price page and floor plans, or speak to the team directly about the applicable tax structure for your unit.
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