Property Update: 12% GST on Buying a Flat – Know These Important Facts Before Purchasing a Home

Ready-to-Move vs. Under-Construction Property: Which One is More Beneficial?

Property prices are rising continuously, yet people are actively buying and selling real estate. If you are also planning to buy a flat, this news is crucial for you. According to new rules, purchasing a flat may require paying up to 12% GST (Goods and Services Tax). Therefore, understanding all aspects of home buying is essential before making a decision.

Owning a home is a dream for many, but it is a decision that requires careful planning. One of the most important questions is whether you should buy a ready-to-move flat or an under-construction property. Both options have their advantages and disadvantages, including differences in GST rates. Let’s explore which option is more suitable for you.

GST on Under-Construction Property

Purchasing an under-construction property requires mandatory GST payment. The rate of GST varies based on the type of property:

Type of Property GST Rate
Affordable Housing 1%
Residential Property 5% (Without ITC)
Commercial Property 12%

If you buy an under-construction property worth ₹50 lakh, you will have to pay additional GST:

  • Affordable Housing (1%) → ₹50,000
  • Residential Property (5%) → ₹2,50,000
  • Commercial Property (12%) → ₹6,00,000

This additional GST increases the total cost of purchasing an under-construction property.

No GST on Ready-to-Move Flats

If you buy a ready-to-move flat, you are exempted from GST, which significantly reduces the overall cost.

However, stamp duty and registration charges still apply, which can range between 5% to 10%, depending on state government regulations.

Why is a Ready-to-Move Flat More Beneficial?

  • No GST, making it a more cost-effective option.
  • Immediate possession, eliminating the need for temporary rentals.
  • Better decision-making, as you can inspect the flat before purchasing.

Impact of GST on Developers

Before GST, developers had to pay multiple taxes like VAT, Service Tax, and Excise Duty. These have now been replaced by a single GST system, simplifying taxation.

However, the removal of Input Tax Credit (ITC) has increased construction costs, putting an additional financial burden on developers.

GST 2025: Tax Rates on Construction Materials

Construction Material GST Rate
Cement 28%
Steel 18%
Tiles & Marble 18%
Sand 5%

Developers must pay high GST on construction materials, which in turn increases the price of under-construction properties.

Which Option is Better: Under-Construction or Ready-to-Move?

Now, the question arises: which option is more suitable based on budget and investment goals?

Advantages of Under-Construction Property:

✅ Generally cheaper than ready-to-move flats.
✅ Flexible payment plans, allowing installment-based payments.
✅ Higher appreciation potential, as property value may increase over time.

Disadvantages of Under-Construction Property:

❌ GST cost increases the total price.
❌ Risk of project delays, leading to financial strain.
❌ Cannot assess final quality until the construction is complete.

Advantages of Ready-to-Move Flats:

✅ Immediate possession, no waiting period.
✅ No GST, reducing financial burden.
✅ Can inspect the property before buying, ensuring quality and satisfaction.

Disadvantages of Ready-to-Move Flats:

❌ Higher initial cost, as prices are generally more expensive.
❌ Large down payment requirement, which may be financially challenging.

Expert Opinions

Real estate experts suggest that homebuyers should not only focus on price but also consider other critical factors, such as:

  • Location – A good location ensures better resale value and appreciation.
  • Delivery Time – If you need immediate possession, a ready-to-move flat is the right choice.
  • Budget – If you are looking for a cost-effective option with flexible payment, an under-construction property may be a better fit.

Conclusion

If you want immediate possession and wish to avoid GST, then a ready-to-move flat is the better option. However, if you plan for long-term investment and prefer installment-based payments, then under-construction property might be the right choice.

Before buying a home, evaluate all aspects carefully and choose the best option according to your financial goals.

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