Under-Construction Flat? Your GST Bill Explained
A Madras HC ruling says GST cannot be charged on projected revenue before construction starts. For homebuyers, this is a reminder that you should only pay GST on actual payments made — not on imaginary future income of builders.
GST on a ₹60L flat adds ₹3L to your cost — that's 3 years of chai money gone before you move in.
You pay this on every under-construction flat — before you get the keys
Key Takeaways
Check your builder's payment schedule and confirm GST is being charged instalment-by-instalment — not as a lump sum at booking before construction begins.
Ask for a proper GST invoice (with GSTIN) for every payment you make — this is your legal record for any future dispute or tax credit claim.
Verify your property qualifies as 'affordable housing' (carpet area under 60 sq m in metros, price under ₹45L) — if it does, GST drops from 5% to just 1%, saving you lakhs.
A Madras HC ruling says GST cannot be charged on projected revenue before construction starts. For homebuyers, this is a reminder that you should only pay GST on actual payments made — not on imaginary future income of builders.
Here's what happened: Madras HC ruled that GST cannot be levied on a builder's projected revenue before construction has actually started, ordering a fresh assessment.. The court also directed that the builder's frozen bank accounts be released subject to a ₹50 lakh deposit, signalling over-reach by tax authorities.. Under Indian GST law, under-construction properties attract 5% GST (1% for affordable housing), but only on amounts actually received during construction — not on hypothetical future earnings..
What you should do: Check your builder's payment schedule and confirm GST is being charged instalment-by-instalment — not as a lump sum at booking before construction begins.. Ask for a proper GST invoice (with GSTIN) for every payment you make — this is your legal record for any future dispute or tax credit claim.. Verify your property qualifies as 'affordable housing' (carpet area under 60 sq m in metros, price under ₹45L) — if it does, GST drops from 5% to just 1%, saving you lakhs..
Once your builder receives the Occupancy Certificate (OC), zero GST applies — so if you delay final payment until after OC, you legally pay no GST on that instalment.
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- [1]“Goods and Services Tax | GST Cannot Be Levied on Projected Revenue Before Construction Begins: Madras HC” taxguruin · 15 Oct 2026
This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.
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