GST on Under-Construction Flats in Delhi NCR: 1% vs 5% Explained
Contents
If you are comparing flats in Gurugram, Noida, Ghaziabad, Faridabad or Delhi, the GST on an under construction flat can change your final cost by lakhs. Two buyers can pay very different tax on similar-looking homes. The reason is how the flat is classified and whether the building already has its completion or occupancy certificate.
This guide explains the 1% and 5% rates, the affordable-housing test, which charges get taxed, and how to check the builder’s demand letter and invoice. All figures are for illustration, and rules can change, so confirm with the builder and a chartered accountant before you pay.
GST on an under construction flat: the short version
Since 1 April 2019, the GST rate is 1% for affordable housing and 5% for other under-construction residential units, both without input tax credit. Once the building has its completion certificate, the picture changes completely.
| Type of purchase | GST treatment | Notes |
|---|---|---|
| Under-construction, affordable (meets area and price limits) | 1%, without ITC | Both the carpet-area and price tests must be met |
| Under-construction, all other residential | 5%, without ITC | Applies to any flat that fails either test |
| Ready flat sold after OC/CC | Outside GST | Stamp duty and registration still apply |
| Resale flat from an individual owner | GST does not apply | Stamp duty and registration still apply |
The 2025 GST rate overhaul did not alter these residential rates. One summary of the 22 September 2025 reform notes that it left the residential real-estate rates unchanged. GST rates are decided by the GST Council and can be revised, so check the current position before booking.
What counts as affordable housing in Delhi NCR?
A flat gets the 1% rate only if it passes two tests together. The carpet area must not exceed 60 sq m in a metropolitan city (90 sq m elsewhere), and the gross amount charged must not exceed ₹45 lakh. Failing either test puts the flat in the 5% bracket.
For this test, “metropolitan” in Delhi NCR is limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon and Faridabad. So the 60 sq m limit applies in those six. A project in another NCR town may fall under the 90 sq m limit instead. That is our reading of the “limited to” wording, so ask the builder to confirm in writing which limit they used.
Some practical points:
- Carpet area, not super area. 60 sq m is roughly 645 sq ft of usable floor area inside the walls. A flat sold as 1,000 sq ft super area can have a much smaller carpet area. Check the carpet area in the agreement and the RERA registration.
- The ₹45 lakh test is about the amount charged by the builder. The sources we reviewed did not clearly settle whether every add-on (parking, club membership and so on) counts toward the ₹45 lakh. If your price is close to the limit, ask the builder and your CA how they have treated it.
- Project type matters. The definition covers a project that commences on or after 1 April 2019, or an ongoing project where the promoter has not opted to keep paying tax at the old rates.
Why the cut-off matters: a quick comparison
Take two flats, each with a carpet area of 55 sq m in Noida. One costs ₹44 lakh and the other ₹46 lakh. The ₹44 lakh flat qualifies as affordable, and 1% GST comes to ₹44,000. The ₹46 lakh flat crosses the price limit, and 5% GST comes to ₹2,30,000. For ₹2 lakh more in price, the tax is ₹1,86,000 higher. This is an illustration of the rules above, not a prediction for any actual project.
How the 5% rate works
The builder is supplying you a construction service while the building is incomplete, so GST applies. The tax is not charged on land. The rule treats one-third of the price as land and applies a 7.5% (or 1.5%) rate to the rest, which gives an effective 5% (or 1%).
The GST Council’s own FAQ for the real estate sector describes the rates as effective rates after deduction of land value, at 1% for affordable apartments and 5% for others, without ITC, on total consideration. In plain terms, the 5% is meant to work out to 5% of your total flat price once the land deduction is built in.
A note on conflicting calculators. Some websites apply 5% to only two-thirds of the price. That gives roughly 3.33% of the total, and 0.67% for the affordable bracket. They are describing the same deduction differently. If your builder’s invoice shows 5% of the full agreement value, that matches the GST Council’s description. Ask for the calculation to be shown line by line instead of guessing.
The no-ITC condition also matters. The builder cannot claim input tax credit on construction costs under this scheme, so the lower rate is not accompanied by a credit passed on to you. Builders under this scheme must also buy at least 80% of inputs from registered suppliers, or pay 18% under reverse charge on the shortfall. That is the builder’s compliance cost, not a separate line for you.
Worked examples (before stamp duty and registration)
These examples assume the full price shown is the total consideration, and that all charges are taxed at the flat’s rate. They are simplified for illustration.
| Scenario | Total price | Rate | GST | Price plus GST |
|---|---|---|---|---|
| Affordable flat, 55 sq m carpet, Ghaziabad | ₹40,00,000 | 1% | ₹40,000 | ₹40,40,000 |
| 55 sq m carpet, price above the limit | ₹46,00,000 | 5% | ₹2,30,000 | ₹48,30,000 |
| Mid-segment flat, Gurugram | ₹80,00,000 | 5% | ₹4,00,000 | ₹84,00,000 |
| Larger flat, Greater Noida West | ₹1,50,00,000 | 5% | ₹7,50,000 | ₹1,57,50,000 |
| Ready flat with OC, any NCR city | ₹80,00,000 | No GST | ₹0 | ₹80,00,000 |
To see the land deduction at work, take the ₹80 lakh flat. One-third (₹26,66,667) is treated as land, leaving about ₹53,33,333. At 7.5% on that amount, GST is ₹4,00,000, the same as 5% of ₹80 lakh.
GST is also not charged only at the end. It is charged as each instalment is received by the builder, whether booking amount or construction-linked demand. On a ₹8 lakh instalment for the ₹80 lakh flat, GST at 5% would be ₹40,000, shown on that demand.
Which charges on the cost sheet attract GST?
Cost sheets in NCR often run to a dozen lines. The treatment below is the general position reported in secondary sources, not an official list. Check each line with your builder and CA.
| Charge | Usual GST treatment |
|---|---|
| Basic sale price | Taxed at 1% or 5% |
| Preferential location charges (PLC) | Part of the construction consideration and taxed at the same rate as the flat |
| Covered parking, club membership, amenity charges | Reported to attract GST at the same rate as the flat when part of the same supply agreement |
| Parking sold separately after completion | Reported to be treated as a standalone supply at 18% |
| EDC and IDC (common in Haryana) | Unclear from the sources we found. Ask the builder in writing how they are taxed. In Gurugram, EDC is collected by builders and deposited with the Haryana town planning department |
| Maintenance charges collected by the builder before the society is formed | Generally treated as a service and taxed at 18% |
| Stamp duty and registration | State levies, not GST |
Keep the 18% maintenance charge separate in your mind. It is not the 5% or 1% construction rate, and it sits on a different part of the bill.
Why ready flats with an OC do not attract GST
Under GST law, a building that is already complete is no longer a service in progress. Sale of a ready-possession flat after the completion or occupation certificate is treated as sale of immovable property and falls outside GST under Schedule III, Entry 5 of the CGST Act, 2017. The government has also clarified that GST applies only to under-construction property, or ready flats where the completion certificate had not been issued at the time of sale.
You still pay stamp duty and registration, but no 1% or 5% GST. Two cautions:
- Timing of payment. The exemption depends on when the money is paid. One explanation says the building sale is outside GST only if the entire consideration is received after the completion certificate. If you paid instalments before the certificate was issued, GST may have been charged on those payments. Ask the builder for a statement of GST already paid.
- Phased certificates. Large projects often get certificates in stages. Confirm in writing that the certificate has been issued for your specific tower or unit, not just the project in general.
Terminology differs between authorities. Delhi, Haryana and Uttar Pradesh use different names for the final approval (OC, CC, part-OC). Ask for a copy of the actual certificate and check it covers your tower.
How to read the builder’s invoice and demand letter
Use this checklist when a demand letter arrives:
- Match the rate to your flat. Under-construction residential flats should show 1% or 5%. If you see 18% on the flat itself, ask for an explanation. One explainer says 18% is not the applicable rate for residential under-construction flats.
- Check the tax split. For a project within one state, the GST is split as CGST and SGST (2.5% plus 2.5% for the 5% bracket; 0.5% plus 0.5% for the 1% bracket).
- Look at the taxable value. It should be clear whether GST is calculated on the full price or on a land-adjusted amount, and the rate should match that method.
- Match the amount to the stage. GST should be tied to the instalment you are paying, not a lump sum for the whole flat.
- Find the GST registration number. Make sure the invoice shows the builder’s GSTIN, the project name and your unit number.
- Ask for itemisation. One real-estate advisory suggests having GST itemised separately in the payment schedule instead of folded into a single all-inclusive number.
- Keep every invoice. You may need them for home loan paperwork or a dispute.
Older projects and changing rules
Some ongoing projects launched before April 2019 may be on older rates. For ongoing projects, the promoter had an option to pay at the old effective rates of 8% or 12% and claim credit, and was expected to pass the benefit of that credit to buyers. If you are buying into an older project, ask which scheme the builder selected.
The figures in this article reflect what we could verify on 20 October 2026. We could not check every notification text directly, and rules, rates and clarifications can change. Treat this as general information, not tax advice.
What to do next
Before you shortlist a flat, put the carpet area and total price side by side and test them against the affordable-housing limits. Then ask the builder for a full cost sheet showing the GST line for each charge.
You can browse all projects and filter by city and builder. If you are looking at a specific market, see new projects in Gurugram, new projects in Noida or new projects in New Delhi. Comparing projects that are already complete against those still under construction is a useful way to see how much GST is actually in play.
Frequently asked questions
What is the GST rate on an under construction flat?
It is 1% for affordable housing and 5% for other under-construction residential units, both without input tax credit. The rates have applied since 1 April 2019.
Do I pay GST if the flat already has an occupancy certificate?
No. A flat sold after the completion or occupation certificate is treated as sale of immovable property, outside GST. Stamp duty and registration still apply, and GST may apply to any instalments paid before the certificate was issued.
Does a flat priced under ₹45 lakh automatically get 1% GST?
No. It must also meet the carpet-area limit of 60 sq m in a metropolitan city or 90 sq m elsewhere, with the gross amount charged not above ₹45 lakh. Failing either test means the 5% rate applies.
Which NCR cities count as metropolitan for the 60 sq m limit?
Delhi NCR is limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon and Faridabad for this purpose. Ask the builder which limit they applied if your project is elsewhere in the wider NCR.
Can a homebuyer claim input tax credit on the GST paid?
No. Both the 1% and 5% rates come with no input tax credit benefit passed to the buyer.
Is GST charged on stamp duty and registration fees?
No. Stamp duty and registration charges are state levies under the Indian Stamp Act and the Registration Act. They are separate from the builder's GST invoice.
Did the September 2025 GST changes alter the rate on residential flats?
One summary says the 22 September 2025 reform left under-construction residential rates unchanged. The GST Council can revise rates later, so confirm the current position before booking.
Sources
- GST Council: FAQ on real estate sector
- GST on Real Estate (Taxmann)
- No GST on sale of flats with completion certificate; Govt. clarifies (Taxmann)
- GST on Construction Services: Provisions, Rates & Compliance (TaxGuru)
- GST on Real Estate Sector – Commercial & Residential Apartment (TaxGuru)
- FAQs on GST on Real Estate Transaction (TaxGuru)
- FAQs on real estate (Lawcrux)
- Flat Sold After Completion Certificate: Why No GST Applies (Terra Insight)
- Car Parking Charges in Real Estate: GST Treatment (Terra Insight)
- GST on Under-Construction Property: Rates & Calculation 2026 (HomeFirst)
- GST on Flat Purchase India (HomeFirst)
- GST on Construction & Real Estate 2025-26 (TaxClue)
- GST for Builders: Rates, ITC & Compliance Guide (DisyTax)
- GST on Under-Construction Flats in India 2026 (The Propertist)
- GST on Real Estate 2026 (FinLecture)
Updated 20 October 2026. This article is general information, not legal or financial advice; check current rules and project details before you decide.
