Know how GST applies to under-construction vs ready-to-move-in homes
Buying a home is one of the biggest milestones in life — and naturally, it comes with a fair share of paperwork, payments, and taxes. One term that often confuses first-time buyers is GST — or Goods and Services Tax — especially when deciding between under-construction and ready-to-move-in properties.
So, what exactly is GST in real estate? When does it apply, and how much do you need to pay? Let’s simplify it for you.
What is GST in Home Buying?
GST (Goods and Services Tax) is a tax that replaced many indirect taxes in India. In the context of home buying, GST is applicable only on under-construction properties.
If you’re buying a flat that’s still being built (i.e. not completed or not having an occupancy/completion certificate), GST will apply to the value of the property. But if the property is ready-to-move-in, there is no GST.
GST on Under-Construction Homes (As of 2025)
The GST rates are:
- 5% GST on under-construction properties (without ITC – Input Tax Credit)
- 1% GST if the home is part of an affordable housing project
These rates are applicable on the base price of the property (excluding stamp duty and registration charges).
Affordable Housing Definition:
- Home size: Up to 60 sq. meters in metros or 90 sq. meters in non-metros
- Property value: Less than ₹45 lakh
So, if you’re buying a ₹40 lakh home in a non-metro under an affordable housing scheme, your GST will be just 1% = ₹40,000.
GST on Ready-to-Move-In Homes
This is the simple part — there’s no GST if:
- The construction is complete, and
- The builder has received the completion certificate before you make the purchase
You still pay stamp duty and registration charges, but no GST is charged by the builder.
What About Stamp Duty and Registration?
GST is separate from:
- Stamp Duty: Usually between 5%–7% (varies by state)
- Registration Charges: 1% of the property value in most cases
You pay these whether you buy an under-construction or ready property. So even if you escape GST, these still apply.
Should You Worry About GST?
Not really — just plan for it in your budget. Here’s a simple breakdown:
| Type of Property | GST Rate | Who Pays It? |
| Under-construction home | 5% or 1% | Buyer (you) |
| Ready-to-move-in property | 0% | No GST applied |
| Affordable housing | 1% | Buyer |
If you’re going for a home loan, GST is not added to your loan amount — you have to pay it from your own pocket, so keep that in mind while planning your down payment and costs.
Final Word
GST might sound like a heavy term, but once you know the basics, it’s easy to navigate. The key is knowing what kind of property you’re buying — under-construction or ready possession — and budgeting accordingly.
Whether you’re looking for affordable housing or your forever home, knowing how GST works helps you make smarter financial decisions.
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