GST on Under-Construction Apartments Explained

GST applies to any residential unit sold before its completion certificate arrives. The government treats this sale as a service, since construction work is still ongoing on paper. Once a project receives its completion or occupancy certificate, the same transaction falls outside GST entirely. This distinction comes from Schedule III of the CGST Act. That law places completed property sales outside the scope of goods and services tax. A buyer paying instalments during construction pays GST on each instalment.

The table below sets out the applicable rate for each housing category as it stands in 2026.

Affordable housing carries its own strict definition under GST rules. A unit must meet both a price cap and a carpet area limit to qualify. In metro cities, the carpet area limit stands at 60 square metres, close to 645 sq ft. The price also cannot cross ₹45 lakhs.

A quick check against these two conditions settles this question for every unit type at the project.

Even the smallest 1 BHK at Prestige KIADB crosses the ₹45 lakh price cap by a wide margin. This rules out the 1% affordable housing rate for every configuration here. Every buyer at this project should plan around the standard 5% GST rate. This applies regardless of the unit size you pick.

GST gets applied to the base sale price quoted by the builder. This happens before other charges like registration or parking get added. Here is what that looks like across the three configurations on offer.

These figures use current pre-launch pricing. They will shift once the official cost sheet and floor-wise pricing arrive after the October launch. Treat this table as a working guide, not a final invoice.

Many first-time buyers confuse GST with stamp duty, though the two work quite differently. GST goes to the central government and covers the construction service itself. Stamp duty and registration charge go to the Karnataka state government instead. These cover the legal transfer of property into your name. Karnataka currently charges stamp duty between 3% and 5% of the property value. A separate 1% registration charge applies on top of that. Budget for all these costs alongside GST, since neither one replaces the other.

A property becomes exempt from GST the moment its completion or occupancy certificate gets issued. This is why resale flats and fully finished projects rarely carry a GST line item. Prestige KIADB is still years away from this stage, with possession targeted for 31 December 2031. Every rupee paid toward this apartment before that certificate arrive will carry GST at the applicable rate. Buyers hoping to avoid GST entirely would need to look at a completed unit elsewhere. A pre-launch purchase always falls under construction-linked tax rules.

The recent GST 2.0 reform mainly reworked tax rates on construction materials. It did not touch the tax rate buyers pay on their flat. Cement moved down from 28% to 18% under this reform. Items like tiles, marble and sand dropped from the 12 to 18% range down to 5%. Builders should see real savings on raw material costs as a result. Analysts expect these savings to translate into slightly lower launch prices over the coming months. The 1% and 5% GST slabs on flat purchases themselves remain unchanged for now.

GST is only one line item in your total possession-stage cost. Keep these in mind while you plan your budget.

• Stamp Duty: Runs between 3% and 5% of the property value in Karnataka.
• Registration Charges: A flat 1% fee paid to register the sale deed.
• Maintenance Deposit: A separate advance amount collected by the builder at handover.
• Parking Charges: Priced separately from the base apartment cost.