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Property Update: Buying a Flat? Know How 12% GST Can Impact Your Home Purchase

Ready-to-Move vs. Under-Construction Property – Which One Should You Choose?

With property prices rising steadily, real estate transactions continue to attract buyers and investors. If you are planning to buy a flat, you must understand the latest GST (Goods and Services Tax) rules that could significantly impact your budget. A flat purchase now attracts up to 12% GST, making it essential for homebuyers to weigh their options carefully.

One of the biggest dilemmas homebuyers face is choosing between a ready-to-move property and an under-construction property. Each has its own set of advantages and disadvantages, and the applicable GST varies between them. Let's break it down to help you make an informed decision.

GST on Under-Construction Property

If you opt for an under-construction property, GST is mandatory. The applicable rates depend on the type of property:

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

For example, if you purchase an under-construction property worth ₹50 lakh, the additional GST will be:

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

This clearly shows that GST significantly increases the total cost of buying an under-construction property.

No GST on Ready-to-Move Flats

A ready-to-move flat is a more cost-effective option because no GST is applied to such properties. However, buyers must still pay stamp duty and registration charges, which vary from 5% to 10% depending on the state government’s regulations.

Why Choose a Ready-to-Move Flat?

  • No additional GST, reducing overall costs.
  • Immediate possession, eliminating the need to pay rent while waiting for construction to complete.
  • Clear property inspection, as you can see what you are buying before making a payment.

How GST Affects Developers

Before GST, real estate developers had to pay multiple taxes such as VAT, Service Tax, and Excise Duty. The introduction of GST has simplified the tax structure but also brought challenges.

One major drawback for developers is the removal of Input Tax Credit (ITC), which has increased construction costs. Since higher GST on raw materials adds to the cost, this increase is often passed on to buyers.

GST 2025: Tax Rates on Construction Materials

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

These high GST rates on raw materials directly impact property prices, making under-construction homes more expensive.

Under-Construction vs. Ready-to-Move – Which is Better?

If you are confused between under-construction and ready-to-move properties, consider these key factors before making your decision.

Advantages of Under-Construction Property:

✅ Lower initial cost compared to ready-to-move flats.
✅ Flexible payment options, with installment plans available.
✅ Higher appreciation potential, as property values generally increase over time.

Disadvantages of Under-Construction Property:

❌ Higher total cost due to GST, adding an extra financial burden.
❌ Project delays can lead to financial uncertainty.
❌ Uncertainty about quality, as you cannot inspect the final product.

Advantages of Ready-to-Move Flats:

✅ Immediate possession, eliminating waiting time.
✅ No GST, making it a more cost-effective option.
✅ Complete transparency, as you can inspect the property before buying.

Disadvantages of Ready-to-Move Flats:

❌ Higher upfront cost, as these flats are usually more expensive.
❌ Larger down payment, which may be challenging for some buyers.

Expert Opinions – What Do Real Estate Professionals Say?

Real estate experts emphasize that homebuyers must look beyond just price and consider factors such as:

  • Location – A prime location can boost future resale value.
  • Delivery Timeline – If you need a home urgently, ready-to-move is the best choice.
  • Budget Flexibility – If you prefer paying in installments, under-construction properties may be a better option.

Final Verdict – Which Property Type is Right for You?

  • If you want immediate possession and want to avoid GST, go for a ready-to-move flat.
  • If you are okay with waiting and prefer lower initial costs with installment payment plans, then an under-construction property might be suitable.

Carefully evaluate your budget, timeline, and long-term investment goals before making your final decision.

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