GST on Under-Construction Property — What Buyers Actually Pay

Goods and services tax applies to the sale of under-construction property but not, in general, to the sale of a completed property for which a completion certificate has been issued. This single distinction drives most of what a buyer pays, so the first question to ask about any floor is whether, in tax terms, it is under construction or ready and certified.

For under-construction residential property, GST is charged on the amount paid to the builder toward construction. As an indicative guide, under the structure introduced in 2019 many such sales attract a lower GST rate for affordable housing and a somewhat higher rate for other residential units, in both cases without input tax credit being passed on to the buyer. Rates, the definition of affordable housing and the conditions change, so confirm the current rate applicable to your specific purchase.

If you buy a ready-to-move floor where the completion or occupancy certificate has already been issued before the sale, GST generally does not apply to that sale at all. This is one reason the tax treatment of two otherwise similar floors can differ sharply depending on stage, and it is worth factoring into your comparison of options.

A few finer points matter. GST is a separate cost from stamp duty and registration charges, which you pay to the state regardless — the two are not interchangeable. The treatment can also differ between the building and the land component, and specific rules apply to elements like preferential location and other charges. If in doubt about what a particular charge attracts, ask the builder for a clear breakup.

Because the builder collects and deposits GST, insist on a proper tax invoice that shows the rate and amount charged, and check that the GST line on your payment demands matches the applicable rate. If a builder quotes an all-inclusive price, ask specifically how much of it is GST so you can compare offers on a like-for-like basis.

GST rates, thresholds and rules for real estate have changed more than once and can change again. Treat the rates and categories here as indicative only, and verify the current GST position for your specific property with the builder and a tax professional before you finalise the purchase.