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GST on Flat Purchase: A Simple Guide for First-Time Buyers


10, January 2026

The Goods and Services Tax (GST) is a major tax reform in India, but when it comes to buying a flat, many buyers are still unsure about how it affects their purchase.

Will GST raise the flat's price? Does it apply to all types of properties? What are the rates and exemptions?

If you’re planning to buy a flat, this blog will answer your questions about how to pay GST on flat purchase, GST on flats below 45 lakhs, and more, in a simple and easy-to-understand way. Let’s dive in!

What is GST on Flat Purchase?

GST is a single tax that replaces multiple other taxes like VAT, service tax, and excise duties, making the tax system simpler and more transparent.

When you buy a flat, GST is charged on the construction cost, but not on the land or property itself.

In simple terms, GST applies to the building or development of the flat you're purchasing, and the rate depends on how much of the project is completed.

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GST Rates on Flat Purchase

The GST rates for flat purchases depend on the type of project and its completion status:

⇒ Under Construction Flats:

GST applies to the builder's construction cost if you’re purchasing a flat in a building still under construction. Currently:

  • 5% GST is charged on residential properties without any input tax credit (ITC).
  • 1% GST applies to affordable residences, which involve possessions priced below Rs. 45 lakhs and accompanying a carpet area of up to 60 square meters (in metro cities) or 90 square meters (in non-metro cities). This is important when looking for GST on flat purchases below 45 lakhs.

Completed Flats:

If you’re buying a completed or ready-to-move-in flat, GST doesn’t apply because the flat is no longer under construction.

Consider Reading: Tax Benefits for Luxury Homes in Bangalore to Know

What is Input Tax Credit (ITC)?

A major advantage of GST is the Input Tax Credit (ITC). This allows builders and developers to repay the taxes they paid on things like raw materials and services used in construction.

However, the 5% GST on under-construction flats doesn’t include ITC. This means that you, as a consumer, can’t claim back the taxes paid by the builder.

This is a significant point to remember when comparing the overall cost of a flat, as it affects the final price you pay.

How Does GST Impact the Price of Your Flat?

Although GST is only applied to the construction cost, it still affects the total price of the flat.

Builders usually pass on the GST cost to buyers, which means you’ll notice a small increase in the flat's price compared to the time before GST when separate taxes like VAT and service tax were charged.

For example, if the construction cost of a flat is Rs.40 lakhs and the GST rate is 5%, an extra Rs.2 lakhs will be added to the final price.

GST Exemptions on Flats

There are some exemptions that help make it easier for low-income purchasers to afford a home:

  • Affordable Housing: Affordable housing is taxed at a lower GST rate of 1%, with no input tax credit (ITC). This makes a big difference in the final price, especially for those looking for GST on flats below 50 lakhs.
  • Land or Development Rights: GST does not apply to the purchase of land or development rights - only the construction cost is subject to GST.

Additionally Read: GST On Real Estate Reduced For Homes and Under Construction Projects

When Does GST Not Apply?

  • Resale Flats: GST does not apply to resale flats since they are already built, and no building work is involved.
  • Land Purchase: GST is not charged when purchasing land. You will only pay stamp duty, not GST.

The Impact of GST on Homebuyers

GST has made the tax system simpler and more transparent, but it has raised the upfront cost of purchasing a new flat, exceptionally for under-construction ones.

However, the impact is softened by exemptions for inexpensive residences and the feasibility for builders to claim input tax credits, which lower the overall construction cost over time.

How Can You Save on GST?

  • Choose Affordable Housing: If you're eligible for inexpensive housing, you’ll pay just 1% GST, which is more inexpensive.
  • Go for Ready-to-Move-In Flats: If you need to move in fast, a ready-to-move-in flat won’t have any GST.
  • Look for Discounts and Offers: Builders sometimes offer discounts to help reduce the GST costs, so be on the lookout for these deals.

Final Thoughts

Understanding GST on flat purchases is important for managing your home purchasing budget. While it can increase the initial cost, the tax system makes the property market transparent and more organized.

Make sure to check the GST rate for your flat, look into affordable housing alternatives, and time your purchase well to get the best value.

Whether you're purchasing an under-construction flat or a ready-to-move-in home, knowing how to calculate GST on flat purchases will help you make an informed decision and avoid surprises.

Next time someone asks how to pay GST on flat purchases, you’ll be ready to share your knowledge and maybe even save money on your dream home!

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