First, Which Situation Are You In?
GST on construction depends entirely on what you are buying. There are two very different situations, and people mix them up constantly. Situation A: you hire a contractor to build on your land — you are buying a construction service (a "works contract"). Situation B: you buy an under-construction flat from a developer — you are buying a property under construction.
The tax treatment differs between the two, so the first step is always to be clear about which one applies to you. This article gives the general position; because GST rates and rules change, confirm the current rate for your specific case with a tax professional before budgeting.
Hiring a Contractor (Works Contract)
When you engage a contractor to construct a building, that is a works-contract service. As a general position, construction works-contract services attract GST at 18% (with the contractor able to claim input tax credit on their own purchases). This is charged on the contractor's invoice for the service.
For a homeowner, this simply means the contractor's bill carries GST — so factor it into your budget from the start rather than being surprised by it at billing. A registered contractor should show GST separately on the invoice; that transparency is a good sign.
Buying an Under-Construction Flat
Buying a flat from a developer while it is still under construction is taxed differently. Under the scheme that has applied in recent years, GST on under-construction residential flats is broadly 5% for non-affordable housing and 1% for affordable housing (without input tax credit for the developer), charged on the sale consideration.
Crucially, a ready-to-move property that has already received its completion certificate is treated as immovable property, not a supply of construction service — so GST does not apply to that sale at all. This is one reason buyers weigh under-construction against ready-to-move options.
Practical Takeaways
Three things to remember. First, identify your situation — contractor service vs buying a flat — because the rate and rules are not the same. Second, budget for GST from the start when hiring a contractor; it is a real line item, not an afterthought. Third, ready-to-move (post-completion-certificate) flats do not attract GST on sale, which changes the maths versus under-construction.
Because GST rates, thresholds and conditions are periodically revised, treat the numbers here as orientation, not final advice. For anything material to your budget, confirm the current position with a qualified tax adviser.
Frequently asked
What is the GST rate when I hire a contractor to build my house?
Is there GST on buying a ready-to-move flat?
What is the GST rate on an under-construction flat?
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