Price, loans & investment · · 6 min read · By Sorrel Buildcon
GST on Under-Construction Flats — 1% vs 5%
Quick answer
GST on under-construction flats is charged at 1% without input tax credit for homes meeting the affordable-housing conditions, and 5% without input tax credit for other residential units. A completed home sold after the completion certificate attracts no GST. The Sorrel Heights brochure states GST at 1% extra; always confirm the rate written on your own cost sheet.
How GST on under-construction flats works
GST on flats works differently depending on one thing: whether the home is finished. When you buy a home that is still being built, you are treated as buying a construction service rather than a finished immovable property, and that service attracts GST. When you buy a home that is already complete and has received its completion certificate, the transaction falls outside GST altogether. That single distinction explains almost every question buyers have on this subject.
Since the rate revision that took effect in April 2019, the residential rates are 1% and 5%, both charged without input tax credit to the builder. "Without ITC" matters to you indirectly: the developer cannot offset the GST paid on cement, steel and services, so that cost sits inside the base price rather than being credited back. Our note on under construction vs ready to move covers the wider trade-off.
The rates, side by side
| Type of home | GST rate | Input tax credit |
|---|---|---|
| Affordable residential, under construction | 1% | Not available |
| Other residential, under construction | 5% | Not available |
| Completed home with completion certificate | No GST | Not applicable |
| Resale of a completed flat | No GST | Not applicable |
| Land value | Excluded via a deemed one-third abatement | Not applicable |
GST is levied on the value of the construction service, with a standard deemed deduction of one-third towards land value already built into the notified rates. You do not compute that abatement yourself; it is reflected in the effective rate applied on your cost sheet.
What counts as affordable housing for the 1% rate
The lower rate of GST on flats is not a discretionary discount.
It applies only where the unit satisfies both tests below. It applies where the unit satisfies both a size condition and a value condition laid down in the GST notifications.
- Carpet area up to 60 square metres in metropolitan areas, or up to 90 square metres in non-metropolitan areas.
- Gross amount charged not exceeding ₹45 lakh, in both metro and non-metro cases.
Two points trip buyers up. First, the size test uses carpet area, not the super area quoted in brochures — 60 sq.m is about 646 sq.ft of carpet, which can correspond to a considerably larger super area. Read carpet area vs super area and BSP, PLC and super area explained so you are comparing the right number. Second, the value test looks at the gross amount charged, which includes charges forming part of the consideration. Definitions and limits are revised from time to time, so check current rules with a tax advisor.
A worked illustration
The arithmetic itself is simple once the rate is settled. On a construction value of ₹48 lakh, GST at 1% is ₹48,000. On a value of ₹65 lakh at 5%, GST is ₹3,25,000. On a value of ₹95 lakh at 1%, GST would be ₹95,000. These are illustrative calculations to show scale, not a quotation for any particular unit.
Notice how much the applicable rate matters relative to the amounts involved: the difference between 1% and 5% on a ₹60 lakh value is ₹2.4 lakh, which is more than most buyers budget for furnishing. That is why the rate on your cost sheet is worth reading carefully and asking about, rather than assuming.
GST is not the only tax on the purchase
Buyers often merge GST with stamp duty in their heads, and then feel the total has been charged twice. They are separate levies, charged by different authorities, at different times.
- GST — a central and state indirect tax on the construction service, charged by the developer with each demand and shown on the invoice.
- Stamp duty — a state levy on the instrument of transfer, commonly around 7% in Uttar Pradesh, with a rebate within a limit where a woman is the purchaser.
- Registration fee — commonly 1% in Uttar Pradesh, paid when the deed is registered.
- TDS under Section 194-IA — 1% deducted by the buyer on consideration at or above ₹50 lakh and deposited against the seller's PAN.
See stamp duty and registration charges in Noida and the total cost of buying a flat for the full picture. Rates change; confirm current rules with a tax advisor.
What Sorrel Heights states
The Sorrel Heights brochure terms state "GST @1% Extra". The stated total cost for a unit is made up of BSP plus PLC plus meter charges, with GST charged extra on top, and stamp duty and registration payable separately at the offer of possession. Special BSP plans are available depending on payment timing, which changes the base price and therefore the GST amount as well.
Sorrel Buildcon shares approximate, indicative prices that are revised from time to time, so the only reliable figure is the one on the current cost sheet for your chosen unit. Ask for it on price list & payment plan, and read special BSP and payment plans explained to see how payment timing interacts with the base price.
What to check on every demand letter
- GST shown as a separate line, not merged into a single lump sum.
- The rate applied, stated in words or as a percentage.
- The developer's GSTIN printed on the invoice.
- The taxable value the rate has been applied to.
- Your name and unit number spelled exactly as in the allotment letter.
- A proper tax invoice or receipt issued after each payment, kept in one file.
Keep every invoice. If a question ever arises at the time of registration, resale or a loan top-up, the paper trail settles it in minutes. Our questions to ask a builder before booking includes the tax questions worth raising early, and the FAQ covers the common ones.
Get the cost sheet with the tax line on it
GST on flats is easy to understand and easy to get wrong in a conversation, so put it in writing. Ask for a cost sheet that shows BSP, PLC, meter charges, the GST line and the rate, and what falls outside the total.
Sorrel Heights is at Plot 2–5, Novelty Green, Khasra 279, Jalpura, Greater Noida West 201306, sold direct by Sorrel Buildcon with no middleman. Request the current indicative price sheet, compare the 2BHK + Study, 3BHK homes and duplex homes, walk through the booking process, and book a site visit to go through the tax lines with the team in person.
What GST applies to
GST is charged on the price of an under-construction home. Stamp duty and registration are state levies, charged separately at registration. Maintenance deposits and some other charges may attract GST separately — check each line on your cost sheet.
Why ready homes have no GST
Once a building has its completion certificate, the sale is treated as a sale of immovable property, not a construction service, so GST does not apply. That is one of the differences covered in under construction vs ready to move.
Check your receipts
Each demand letter should show the base amount and GST separately, with the builder's GSTIN. Keep them in your document folder.
Facts about Sorrel Heights on this page come from the official brochure and Sorrel Buildcon. General guidance is for information only — confirm rules and rates with the relevant authority before you act.