GST on Under-Construction Flats: Prestige Falcon City Reserve Example

The standard effective rate under the current residential scheme is 5% without input tax credit for homes outside the affordable category. Qualifying affordable homes attract 1% without input tax credit. These rates apply to new projects under the scheme introduced from 1 April 2019.

The effective rate already accounts for the prescribed land deduction. Buyers should not deduct another one-third from the apartment value and then apply 5%. The builder’s invoice should show the value charged and the tax separately.

For a simple budget calculation:

GST amount = GST-exclusive apartment consideration × 5%

The table shows how 5% GST affects three assumed apartment values. These are worked examples, not a unit-wise price list.

Stamp duty, registration and other applicable payments remain outside these totals. The final calculation should use the complete taxable consideration in the selected apartment’s cost sheet.

GST can form part of payments towards an under-construction purchase. Buyers should check whether each demand shows an instalment before tax or a total that already includes tax. This prevents the same GST amount from being added twice.

For example, a ₹14 lakh taxable instalment attracts ₹70,000 GST at 5%, making the payment ₹14.70 lakh. A ₹20 lakh taxable instalment attracts ₹1 lakh GST, making the payment ₹21 lakh.

The instalment schedule spreads the purchase payments over time. It does not reduce the total GST merely because the buyer pays in stages.

Affordable-housing GST depends on both price and carpet area. For the general category in Bengaluru, the home must meet the ₹45 lakh maximum gross amount and 60 sq m carpet-area limit. A home must satisfy both conditions to qualify.

An apartment priced at ₹1.40 crore is above that value limit, even if its carpet area is small. It therefore does not qualify for the 1% rate under this general test.

The number of bedrooms alone does not decide the GST rate. A 1 BHK is not automatically affordable housing, and a project’s marketing description does not replace the tax criteria.

The important test is the timing of the entire consideration against the completion certificate or first occupation. Where the full payment is received after the earlier of those events, the sale falls outside the construction-service provision.

For buyers comparing Prestige Falcon City Reserve with completed apartments, this can create a clear difference in purchase cost. However, a “ready-to-move” advertisement alone is not enough. The relevant completion documents and payment history need to support the treatment.

A completed home may also have a different asking price. Compare the full purchase totals rather than treating the absence of GST as proof that one home is cheaper.

GST is a tax on the taxable construction supply. Stamp duty and registration are separate charges connected with the property documents. A cost sheet should list them on different lines.

In the ₹1.40 crore example, ₹1.47 crore covers the assumed apartment value plus 5% GST only. It is not an all-inclusive purchase budget. Registration charges, applicable premiums and other payments still need to be checked.

Parking, amenity charges and deposits also need clear descriptions. Some amounts may form part of the taxable consideration, while separately supplied services can have different treatment. Use the invoice breakup rather than applying one rate to every line.

The invoice should identify the seller, buyer, apartment and amount being charged. Check the seller’s GSTIN, invoice number, taxable value, tax rate and tax amount.

Keep each invoice with its payment receipt. At the final stage, reconcile the total consideration and GST against earlier demands. Any discount or price adjustment should also appear in the account statement.