GST on Flats Below Rs. 45 lakh: 1% or 5%, and What Decides It

Last updated: Oct 2026

GST on flats below Rs. 45 lakh (Goods and Services Tax) depends on two tests, not one. Price alone does not earn the 1% rate, so a flat under Rs. 45 lakh can still pay 5%.

• Rate: 1% for flats meeting both the price and area tests, 5% for others, both without input tax credit
• Price test: total consideration up to Rs. 45 lakh, including any preferential location charge
• Area test: carpet area up to 60 square metres in metro cities, 90 square metres elsewhere
• Base: GST applies to two-thirds of the agreement value, so the effective rate is 0.67% or 3.33%

• No GST: on ready flats with a completion certificate, and on resale flats

  
  

Check the carpet area in your agreement before you sign. A difference of 6 square metres can cost Rs. 1.17 lakh in GST, as the example below shows.

A flat pays 1% only if both tests are met. The GST Council set these rates at its meeting of 24 February 2019, effective 1 April 2019, and kept them after its September 2025 rate changes.

Metro cities are those named in the GST notification, for example Delhi-NCR, the Mumbai Metropolitan Region, Bengaluru, Chennai, Hyderabad and Kolkata. Confirm your city with the developer.

GST on flats below Rs. 45 lakh is charged on two-thirds of the agreement value, because one-third is deemed to be land.

Formula used: GST = agreement value × 2/3 × rate.

The effective rate is 0.67% of the agreement value at 1% and 3.33% at 5%. On a Rs. 44 lakh flat, that is Rs. 29,333 at 1% and Rs. 1,46,667 at 5%, so the category alone decides a difference of Rs. 1.17 lakh. Ask the developer to show the taxable value and the rate on every demand letter.

The developer adds GST to each stage payment. Stamp duty is a separate state levy, and GST is not charged on it.

You pay no GST on a ready flat with a completion certificate, or on a resale flat.

• A ready flat with an occupancy or completion certificate carries no GST, because the supply is complete
• A resale flat between individuals carries no GST

• A flat bought before the certificate is issued still carries GST on payments made until then

  
  

Trade-off: a ready flat saves GST but needs the full price sooner, while an under-construction flat spreads payments and adds GST.

Four checks confirm which rate applies.

1. Read the carpet area in your agreement for sale, not the brochure figure.
2. Match it to the area on the project's registration under the Real Estate (Regulation and Development) Act (RERA). Learn how the terms differ in the guide to RERA carpet area.
3. Convert square feet to square metres by dividing by 10.764.
4. Compare with 60 or 90 square metres, and confirm the price test, including preferential location charges.

Consider Meghna, a 32-year-old designer in Pune with a household income of Rs. 1.3 lakh a month and a CIBIL Score of 749, comparing two under-construction flats, both priced at Rs. 44 lakh.

Flat B costs Rs. 1,17,334 more in GST for 6 extra square metres. Meghna picks flat A after checking the carpet area in each agreement.

The loan is assessed on the property value, and GST is a separate payment to the developer.

Approval timelines can extend where the agreement value and the stated carpet area need cross-checking, and minimum income thresholds can differ by city. Check your home loan eligibility and read home loan fees and charges.