TL; DR
- GST applies only to under-construction property. Once a project has its Completion Certificate or Occupancy Certificate, buying that flat attracts zero GST, only stamp duty and registration.
- There are two rates: 1% for "affordable housing" and 5% for everything else, both without any input tax credit for the builder or the buyer. This has been the structure since April 1, 2019, and the September 2025 GST 2.0 rate overhaul left these two rates unchanged.
- To qualify for the 1% affordable rate, a Bangalore flat must meet both conditions at once: carpet area of 60 sq. m. or less, and a total price of ₹45 lakh or less. Miss either condition and the full unit is taxed at 5%, not a blended rate.
- Bangalore is officially classified as a metro city for this specific GST definition, which is why the carpet area cap here is 60 sq. m., not the more generous 90 sq. m. that applies in non-metro cities.
- Because most Bangalore apartments, even fairly modest ones, sell above ₹45 lakh today, the 1% rate realistically applies only to specific peripheral or affordable-housing-tagged projects, not the typical Bangalore purchase.
- Bare plots and land, with no construction service attached, fall outside GST entirely. Stamp duty and registration still apply, but those are separate state charges, not GST.
Why GST Applies at All on a Flat You're Buying
This trips up a lot of first-time buyers: GST is not a tax on the property itself, it is a tax on the construction service the builder is providing you while the building isn't finished yet. That is the legal basis for why an identical flat can be GST-free in one case and taxed in another, depending purely on whether construction was complete at the time you bought it.
If you buy from a builder before the project has received its Completion Certificate (CC) or Occupancy Certificate (OC), you are, in the eyes of GST law, paying for an ongoing construction service, and that service is taxable. If you buy the same flat after the CC or OC has been issued, even from the same builder in the same project, no construction service remains to be taxed, so GST does not apply at all. This is also exactly why a resale flat, however new, never attracts GST, only stamp duty and registration.
The Two Rates: 1% and 5%, No Input Tax Credit Either Way
Since April 1, 2019, residential under-construction property in India has been taxed at one of two rates:
| Category | GST Rate | Input Tax Credit Available? |
|---|---|---|
| Affordable housing | 1% | No |
| All other residential (non-affordable) |
Both rates apply without input tax credit (ITC), meaning the builder cannot offset the GST they pay on cement, steel, and other inputs against the GST they collect from you, and you as the buyer get no credit either. This was a deliberate trade-off introduced in 2019: rates dropped sharply from the earlier 12% and 8% rates, but the ITC benefit that came with those higher rates was removed at the same time.
A common point of confusion worth clearing up directly: the GST Council's broader "GST 2.0" rate restructuring, effective September 22, 2025, simplified rates across many goods and services categories, but it did not touch these two residential real estate rates. If you are researching this in 2026, the 1% and 5% figures are still current.
What Actually Counts as "Affordable Housing" for This Purpose
This is where most Bangalore buyers get tripped up, because the term is defined narrowly and both conditions must be satisfied simultaneously, not just one:
- Carpet area does not exceed 60 square metres (roughly 645 sq. ft.) in a metro city
- Total price does not exceed ₹45 lakh
Bangalore is specifically classified as a metro city for this definition (alongside Delhi-NCR, Mumbai-MMR, Chennai, Hyderabad, and Kolkata), which matters because non-metro cities get a more generous 90 square metre carpet area allowance. A unit of the same size and price that would qualify as affordable in a smaller city may not qualify in Bangalore, purely because of this metro classification.
| Condition | Affordable Housing Threshold (Bangalore, as a metro city) |
|---|
Worked Examples: What Two Different Bangalore Flats Actually Pay
The middle row is where most Bangalore under-construction purchases actually land. Given typical Bangalore pricing across established and even several emerging localities, a large share of under-construction inventory in the city sits above the ₹45 lakh threshold, which means the 5% rate, not the more commonly cited 1% rate, is what the majority of Bangalore buyers should actually budget for. The 1% rate is real, but in Bangalore it is realistically limited to specific affordable-housing-tagged projects in peripheral corridors, not the typical mid-market apartment purchase.
What GST Applies To Beyond the Base Price
GST is not limited to the headline flat price. Parking spaces, clubhouse charges, and other amenity charges billed by the builder as part of the same construction service typically attract the same rate (1% or 5%) as the main unit. If you are comparing a builder's all-inclusive quote against a base price plus add-ons, make sure GST is being applied consistently across both, since some quotes bury the GST calculation inside a single bundled figure that can be hard to reverse-engineer.
What Falls Completely Outside GST
- Ready-to-move-in property with a Completion Certificate or Occupancy Certificate already issued: 0% GST, since no construction service remains to tax.
- Resale property, regardless of how new the building is: 0% GST, for the same reason.
- Bare plots and land, with no construction service attached: entirely outside the scope of GST under Schedule III of the GST Act, whether it's a single plot or a residential layout.
In all three of these cases, stamp duty and registration charges under Karnataka's own structure still apply in full, GST exemption does not mean the transaction is tax-free, only that this specific central tax doesn't apply to it.
Commercial Under-Construction Property Is a Different Story
If you are buying commercial space, an office, shop, or godown, under construction, the applicable rate is 12%, and unlike residential property, input tax credit is available if you are a GST-registered business using the space for a taxable purpose. This is a materially different regime from the 1%/5% no-ITC residential structure, so don't assume the same math applies if your purchase is commercial rather than residential.
Why This Matters When You're Comparing Projects
GST is a real, unavoidable addition to your out-of-pocket cost on any under-construction purchase, and it is charged in instalments alongside the builder's construction-linked payment schedule, not as one lump sum at booking. When comparing an under-construction flat against a ready-to-move option at a similar headline price, remember that the ready-to-move option skips this cost entirely. A ₹58 lakh under-construction flat effectively costs you ₹60.9 lakh once the 5% GST is added, a gap worth factoring into any under-construction versus ready-to-move comparison, alongside the other trade-offs like possession timelines and RERA risk.