GST on Under-Construction Property in Mumbai (2026 Guide)

GST on Under-Construction Property in Mumbai

When you book an under-construction flat in Mumbai, the builder’s quoted price usually does not include Goods and Services Tax (GST).

Understanding GST is important because it can increase the final property cost by several lakhs of rupees, depending on the price of the flat.

In this guide, we explain:

• GST rates for property in 2026

• When GST applies

• Why ready-to-move properties do not attract GST

• Other situations where GST may apply during the buying process

  
  

1. The Golden Rule of GST in Real Estate

The GST rule for property purchases in India is straightforward.

Under-Construction Property: GST is applicable.Ready-to-Move Property (with Occupancy Certificate): No GST.

Once a project receives the Occupancy Certificate (OC) from the local authority such as the Municipal Corporation of Greater Mumbai, the property is treated as a completed building rather than a service, which means GST is no longer charged.

This is one reason many buyers prefer ready-to-move homes, especially when the price difference with under-construction projects is small.

2. GST Rates for Mumbai Flats (2026)

GST rates depend on whether the property qualifies as affordable housing.

Category	GST Rate	Criteria (Mumbai/MMR)
Affordable Housing	1%	Price ≤ ₹45 lakh and carpet area ≤ 60 sq. m
Other Residential Property	5%	Price above ₹45 lakh or carpet area above 60 sq. m
Commercial Property	12%	Shops and commercial units

These rates are determined by the Goods and Services Tax Council.

Important: These GST rates apply without Input Tax Credit (ITC), meaning builders cannot claim tax credits on construction materials.

3. Example: GST Calculation

Suppose you purchase an under-construction flat for ₹1.2 crore in Mumbai.

GST payable:

₹1.2 crore × 5% = ₹6 lakh

Builders usually collect this amount in stages along with construction-linked payments.

4. Why Ready-to-Move Homes Avoid GST

GST applies only to properties that are still under construction.

Once a project receives its Occupancy Certificate, the property becomes a completed asset, and GST is not applicable.

Example comparison:

Property Type	Property Price	GST Payable
Under-Construction Flat	₹1 crore	₹5 lakh
Ready-to-Move Flat	₹1 crore	₹0

Avoiding GST can save buyers a significant amount of money. However, buyers should still understand other government charges involved in property transactions. For example, stamp duty and registration charges apply to all property purchases, regardless of whether the property is under construction or ready to move.

You can read our detailed guide on Stamp Duty and Registration Charges in Mumbai (2026 Guide) to understand these costs.

5. Other Charges Where GST May Apply

Even if GST does not apply directly to the property price, it can still appear in other charges.

Home Loan Processing Fees

Banks such as:

• State Bank of India

• HDFC Bank

• ICICI Bank

  
  

charge 18% GST on home loan processing fees.

Housing Society Maintenance

GST may apply to housing society maintenance charges if:

• Monthly maintenance exceeds ₹7,500, and

• The society’s annual collection exceeds ₹20 lakhs

  
  

Parking and Clubhouse Charges

If parking spaces or club memberships are billed separately by the developer, these charges may attract 18% GST.

6. How Ready Reckoner Rates Affect Property Taxes

While GST applies to under-construction properties, stamp duty in Mumbai is calculated based on government-defined property values known as ready reckoner rates. These rates are determined by the Government of Maharashtra and represent the minimum value used for property registration.

To understand how these rates influence property taxes and registration costs, read our guide on Ready Reckoner Rates in Mumbai Explained.

Final Thoughts

GST is an important cost factor when buying an under-construction flat in Mumbai. However, it is only one part of the total expenses involved in a property purchase.

Buyers should always consider additional costs such as:

• Stamp duty and registration charges

• Legal verification fees

• Builder charges

• Home loan processing fees

  
  

To understand every expense involved in purchasing property, read our complete guide on Total Cost of Buying a Flat in Mumbai.

This will help you plan your budget and avoid surprises during the home-buying process.