GST on under-construction apartments explained

GST on an under-construction apartment is 5% of the agreement value if the home costs above ₹45 lakh. Affordable homes pay just 1%, but only up to ₹45 lakh and within a set carpet area. Builders cannot claim input tax credit on either rate, so the rate you see is what you pay. Ready homes with an occupancy certificate carry no GST at all. The GST Council's rate changes in September 2025 left these housing rates unchanged.

This guide explains who pays which rate, what GST applies to and what it does not. It also shows worked examples, so you can budget the tax before you book.

A home qualifies for the 1% rate only if it meets both tests below. If it fails either one, the 5% rate applies.

Hyderabad counts as a metro city for this rule. So most new homes in the city's western corridor fall in the 5% slab.

The legal GST rate on construction is higher, but the law treats one-third of the price as land. Land carries no GST, so the effective rate works out to 5% on the full agreement value. You do not need to calculate this split yourself. The builder simply charges 5% on the agreement value in each demand.

GST applies to the agreement value of an under-construction home. This usually covers:

• The base price of the home.
• Floor-rise and preferred location charges.
• Car parking, if sold as part of the home.
• Club membership, if bundled in the agreement.

GST does not apply to stamp duty, transfer duty or registration fees. These go to the state government separately.

You pay GST in parts, along with each payment you make to the builder. If you pay a 10% booking amount, GST applies on that 10%. As each construction stage falls due, the builder adds GST to that demand. Under a 10:90 plan, most of the GST falls at possession along with the 90% payment.

GST also matters once you move in. A residents' welfare association charges 18% GST on maintenance if two conditions apply. Each member's monthly contribution must cross ₹7,500, and the association's yearly turnover must cross ₹20 lakh. If your bill crosses ₹7,500, GST applies on the full amount, not just the excess. Large homes in premium high-rises often cross this mark.

A ready home saves you 5% GST, but it often costs more per sq. ft. An under-construction home usually offers a lower entry price and a choice of floors. On a ₹1.5 Cr home, the GST gap is ₹7.5 lakh. Weigh this against the price gap and the rent you pay while you wait.

Take Sobha Amara at Kismatpur, a pre-launch SOBHA project with possession expected in December 2029. The 2 BHK starts from an indicative ₹1.61 Cr*, well above the ₹45 lakh limit. So buyers there will pay 5% GST, or about ₹8.05 lakh on the entry unit. Larger 3 BHK and 4 BHK homes will pay more in line with their price. The same logic applies to any premium launch along Chevella Road or in Kokapet.

*Indicative pricing, subject to change and developer confirmation.

• Confirm the GST rate on the builder's cost sheet.
• Check that GST applies only to the agreement value, not to stamp duty.
• Ask for a GST invoice with every payment you make.
• Match the builder's GSTIN with the official GST portal.
• Keep all invoices until you register the sale deed.