Ready to Move vs Under Construction: GST, Risk and Real Costs
A ₹10 lakh gap in headline price shrinks fast once GST, rent and pre-EMI interest are counted. A worked example, and how to judge whether the builder will deliver.
Say a builder offers the same 2 BHK two ways: ₹90 lakh in a finished tower you can move into next month, or ₹80 lakh in a tower that's due in three years. The ₹10 lakh gap looks decisive. By the time you've paid GST, three more years of rent and interest on a loan that's being disbursed as the building rises, it's closer to ₹5 lakh, and a one-year delay wipes it out. That's the real ready to move vs under construction decision: not which is cheaper on the price sheet, but which risk you're better placed to carry.
GST: the one clear difference
A flat bought from a builder before the completion certificate is issued attracts GST. The rate is 5% of the agreement value, without input tax credit, for most homes. Affordable housing pays 1%: that means a carpet area of up to 60 square metres in the metro cities (up to 90 square metres elsewhere) and a price of up to ₹45 lakh. These rates were left unchanged when GST rates were reworked from 22 September 2025.
A ready-to-move flat sold after the completion or occupancy certificate is out of GST altogether, and so is any resale. In our example, GST adds ₹4 lakh to the ₹80 lakh flat and nothing to the ₹90 lakh one.
Charges bundled into the flat, such as preferential location charges and car parking, take the same 5%. The GST Council's 54th meeting led CBIC to clarify in October 2024 that PLC paid along with construction is part of the same composite supply. Club membership and maintenance billed separately are taxed as separate services, typically at 18%.
The rent plus EMI maths
Here's the worked example in full. Our buyer pays ₹25,000 a month in rent today, expects a 5% rent increase each year, and borrows 80% of the base price at an assumed 8% interest over 20 years.
| Over the first three years | Ready to move (₹90 L) | Under construction (₹80 L) |
|---|---|---|
| Down payment (20%) | ₹18.0 L | ₹16.0 L |
| GST at 5% | Nil | ₹4.0 L |
| Home loan | ₹72.0 L | ₹64.0 L, disbursed in stages |
| EMI or pre-EMI interest paid | ₹21.7 L (EMI of about ₹60,200 a month) | ₹7.9 L pre-EMI interest |
| Rent paid | Nil | ₹9.5 L |
| Cash out in three years | ₹39.7 L | ₹37.4 L |
| Loan still owed at the end | ₹67.0 L | ₹64.0 L |
Assumptions: construction-linked disbursement spread evenly over 36 months, possession exactly on time, stamp duty and registration left out because they're similar for both. Interest rates, rents and payment plans differ in practice; use your own numbers.
Read the bottom two rows together. The under-construction buyer has spent ₹2.3 lakh less and owes ₹3 lakh less at the end of year three, so the net advantage is roughly ₹5.4 lakh, not ₹10 lakh. Of the ready buyer's ₹21.7 lakh in EMIs, about ₹4.9 lakh went to reducing the loan; the rest was interest.
Now add a 12-month delay. The under-construction buyer pays another year's rent (about ₹3.5 lakh at the year-four rent) and a full year of interest on the fully disbursed ₹64 lakh (about ₹5.1 lakh). That's ₹8.6 lakh more, and the advantage has turned into a loss. Section 18 of the RERA Act entitles you to interest for each month of delay, but collecting it can take time and a complaint.
What people get wrong: they compare the ready flat's EMI with the under-construction flat's pre-EMI and conclude the new flat is far cheaper to carry. Pre-EMI interest doesn't reduce the loan at all, and it sits on top of rent.
Risk is the other half of the decision
With a ready flat, what you see is what you get. You can check the actual carpet area, look at seepage after a monsoon, meet residents and read the society's accounts. The occupancy certificate either exists or it doesn't.
With an under-construction flat, you are lending the builder money against a promise. The risks are delay, specification changes, a smaller carpet area than agreed, and in the worst case a stalled project. RERA reduced these risks, through the ring-fenced project account, the registered completion date, and the refund and interest rights, but it didn't remove them.
Under-construction flats do offer things a ready tower can't: a choice of floor and facing, payment spread over years, and a lower entry price if the location improves before handover. For a buyer who is already paying rent they can afford and has a stable income, that can be worth the risk. For one stretching to the limit of their loan eligibility, a delay is much harder to absorb.
How to judge a builder's delivery record
- Look up the builder's past projects on the state RERA portal. Compare the originally registered completion date with when the occupancy certificate came. Extensions under section 6 are recorded.
- Read the quarterly progress reports for the phase you're buying into. Construction should move every quarter. A phase stuck at the same percentage for a year needs an explanation.
- Search the authority's orders for the promoter's name. Look for refund and delay-interest orders, not just the count of complaints.
- Visit a finished project by the same builder in the same city. Talk to residents about handover, snag lists and whether the OC arrived before possession.
- Check who funds the project. A lender's NOC or a named bank on the RERA page tells you there's financing behind it.
- Be sceptical of "near possession" labels. Ask for the date the builder has applied for the OC, not the date the sales team expects it.
On IndiProp, the stage shown for each project comes from listing data, so confirm it on the RERA portal. Adani Samsara Avasa in Sector 63, Gurugram, for example, is listed as near possession with a December 2026 date. Compare that with the latest progress report on HRERA before you decide the risk is small.
Ready to move vs under construction: a practical way to decide
- If your rent plus pre-EMI would stretch you, buy ready. The saving on paper isn't worth the pressure of a delay.
- If you need to move within a year (school admissions, a job change), buy ready.
- If the price gap between ready and under-construction homes in the same micro-market is less than GST plus two years' rent, buy ready.
- If the gap is wide, the builder has a clean record in that city, and you can carry a year's slippage, under construction can make sense.
Start with projects in Gurugram, ready-to-move projects in Greater Noida or projects in Pune, then run both scenarios in the home affordability calculator and check current rates on home loans.
Frequently asked questions
Is GST payable on ready to move flats?
No. GST applies only when a flat is sold before the completion or occupancy certificate is issued. Resale flats and ready flats sold after the certificate do not attract GST.
What is the GST rate on an under construction flat?
5% of the agreement value without input tax credit for most homes, and 1% for affordable housing, which means a carpet area up to 60 sq m in metros or 90 sq m elsewhere and a price up to ₹45 lakh.
What is pre-EMI interest?
When a loan is released in stages during construction, you pay only interest on the amount disbursed until possession or full disbursement. It does not reduce the loan principal.
How can I check a builder's delivery record?
Compare the registered completion dates of the builder's past projects on the state RERA portal with the dates their occupancy certificates were issued, and search the authority's orders for delay and refund cases.
Sources: Central Board of Indirect Taxes and Customs (CBIC) GST portal · TaxGuru: GST on preferential location charges after the 54th GST Council meeting · Real Estate (Regulation and Development) Act, 2016 (India Code) · Haryana Real Estate Regulatory Authority
