The Icon Faridabad · Buyer Q&A
What is the GST rate on under-construction commercial property?
The current GST framework on commercial real estate
Under the GST regime, sale of an under-construction commercial property is treated as a 'works contract' and attracts GST at 12% (8% basic + 4% surcharge, or other state-cess breakdowns depending on the assessment). The developer can claim Input Tax Credit on goods and services used in construction, which reduces the effective GST burden. Once the property receives its Completion Certificate (CC) or Occupancy Certificate (OC), it transitions to a 'ready-to-move' state where the sale is no longer treated as a service supply — and GST no longer applies.
What the buyer pays in practice
On a ₹84 L Basic Sale Price for an under-construction commercial unit, the GST line on the cost sheet is approximately ₹10,08,000 (12% of BSP). This is paid alongside the BSP instalments per the construction-linked schedule — the GST is collected milestone-by-milestone as the BSP is invoiced, not as a single up-front payment. Buyers can claim their proportionate ITC on the GST paid if they are GST-registered themselves (e.g., if the buyer is a business using the unit for their own operations).
Why a ready-to-move purchase looks cheaper than it really is
Buyers comparing under-construction vs. ready-to-move commercial sometimes assume 'ready-to-move is GST-exempt so it's 12% cheaper'. That's only directly true if the BSP is identical, which it rarely is — ready-to-move inventory typically transacts at a 15-25% premium to comparable pre-launch pricing, more than offsetting the GST saving. The right way to compare is total all-in cost (BSP + GST + applicable charges + stamp duty + registration), not headline rate.
What to verify on the cost sheet
Three GST checks on any cost sheet: (1) GST is itemised separately from BSP — not bundled in; (2) the GST rate applied is 12%, not the older 18% or other obsolete rates; (3) the developer's GST Registration Number (GSTIN) is on the cost sheet — verify it at gst.gov.in. If the GSTIN doesn't validate or if GST is mysteriously absent on an under-construction quote, the cost sheet is incomplete and you should request a corrected version before booking.
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