Published 7 October 2026
Two buyers pay the same price for identical flats in the same building. One pays GST and the other does not. The difference lies in when the money was paid, relative to one document: the completion certificate. This article explains why, and what GST applies to a flat bought before completion.
A ready flat carries no GST
Schedule III to the CGST Act lists transactions that are not supplies at all. Paragraph 5 is “Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building”. Paragraph 5(b) of Schedule II, in turn, treats as a supply of services the construction of a building intended for sale:
except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.
Read together, the two mean that a flat paid for entirely after the completion certificate, or after first occupation if that came first, is outside GST. It is a sale of a building, and Schedule III takes it out of the tax. The guide on supply explains how Schedules I to III work.
The word “entire” is decisive. If any part of the price, even a booking amount, was paid before the completion certificate, the flat is a supply of construction services, and GST applies.
An under-construction flat: two rates
For flats in residential projects begun on or after 1 April 2019, the rates are in Notification No. 11/2017-Central Tax (Rate), as substituted by Notification No. 03/2019-Central Tax (Rate). The notified rates are rates of central tax, with an equal State tax:
| Type of flat | Central tax | Total GST |
|---|---|---|
| Affordable residential apartment | 0.75 per cent | 1.5 per cent |
| Other residential apartment | 3.75 per cent | 7.5 per cent |
Both rates come with conditions. The builder must pay the tax in cash, may not take input tax credit, and must meet other conditions on its purchases. As at October 2026, the rates are unchanged: the September 2025 rate changes did not touch these entries.
Why the effective rate is 1 per cent or 5 per cent
The price of a flat includes the land, and land is not taxed. The notification deals with this by deeming the value of the land to be “one third of the total amount charged for such supply”. GST is therefore charged on two-thirds of the price.
Applying 1.5 per cent and 7.5 per cent to two-thirds of the price gives an effective rate of 1 per cent and 5 per cent of the total price. These are the figures usually quoted, but the notification itself does not state them. They follow from the arithmetic.
On a Rs 60 lakh flat that is not affordable housing, the taxable value is Rs 40 lakh, and GST at 7.5 per cent is Rs 3 lakh: 5 per cent of the price.
What counts as affordable
An affordable residential apartment, in the notification, is one with a carpet area not exceeding 60 square metres in metropolitan cities or 90 square metres elsewhere, and for which “the gross amount charged is not more than forty five lakhs rupees”. Both the area and the price tests must be met.
The metropolitan cities are Bengaluru, Chennai, Delhi NCR (Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon and Faridabad), Hyderabad, Kolkata and Mumbai, including the whole Mumbai Metropolitan Region.
Working out the GST on a flat
- Was the entire price paid after the completion certificate, or after first occupation if earlier? Then there is no GST.
- If not, is the flat an affordable residential apartment: within 60 or 90 square metres of carpet area, and at a price of no more than Rs 45 lakh? Then 1.5 per cent, on two-thirds of the price, which is 1 per cent effective.
- Otherwise, 7.5 per cent on two-thirds of the price, which is 5 per cent effective.