Under-construction homes are sold on payment plans linked to construction milestones or dates. They are often cheaper than ready homes but carry delivery risk, which RERA disclosures help assess.
Example
A payment plan in Pune
A buyer books a 2 BHK in Wakad, Pune, for ₹80 lakh in a project due in three years. Under section 13 of the RERA Act, the builder cannot take more than 10% — ₹8 lakh — before a registered agreement for sale. The rest falls due as slabs and finishing are completed, with GST added to each instalment.
Figures are illustrative, not market rates.
Questions about Under construction
How much can a builder take before the agreement?
Section 13(1) of the RERA Act bars a promoter from accepting more than 10% of the cost of the apartment, plot or building as an advance or application fee before entering into a written agreement for sale and registering it. Larger demands before that are a red flag.
How does RERA reduce the risk of buying under construction?
Registered projects disclose approvals, layout and timelines on the state RERA portal, and section 4(2)(l)(D) requires 70% of buyers’ money to be kept in a separate account used only for that project’s land and construction. Buyers can also track quarterly updates on the portal.
Is GST payable on an under-construction flat?
Yes. GST applies to instalments paid for an under-construction flat, at a lower rate for homes that qualify as affordable housing. It does not apply once the completion certificate is issued. Check the current rates with CBIC or a tax adviser, because they have changed before.
Sources
- Real Estate (Regulation and Development) Act, 2016 — India Code · accessed
- RERA Act, 2016 full text (hosted by UP RERA) · accessed
- CBIC — GST · accessed
Reviewed