GST on Under-Construction Flats: Prestige Falcon City Reserve Example
Understanding GST on under-construction flats: Prestige Falcon City Reserve example is very easy—homebuyers pay a flat 5% Goods and Services Tax (GST) without Input Tax Credit (ITC) on the base price of the home. Prestige Falcon City Reserve on Kanakapura Road is a luxury project where flats start at ₹1.40 Crore. Since this is above the ₹45 Lakh government limit for budget homes, all 2, 3, and 4 BHK flats have a 5% GST rate. For example, on a 2 BHK flat priced at ₹1.40 Crore, your total GST is ₹7 Lakhs. You do not have to pay this ₹7 Lakhs all at once. Instead, you pay it in small 5% parts along with your building stage payments until you get your home keys in December 2031.
How the 5% GST Rule Works for Real Estate Buyers
Under the Indian government tax rules for homes, flats that are still being built fall into two simple tax groups:
- 1% GST Slab (Affordable Housing): This is only for small flats up to 60 sq. meters (645 sq. ft.) of carpet area in big cities like Bengaluru, and the price must be ₹45 Lakhs or less.
- 5% GST Slab (Non-Affordable / Premium Housing): This applies to all flats priced above ₹45 Lakhs or bigger than 645 sq. ft. of carpet area.
What does "5% without Input Tax Credit (ITC)" mean?
Before 2019, builders charged 12% GST on flats under construction. Later, they gave back small tax discounts (called Input Tax Credit) for the tax they paid on cement, steel, and labor. Today, the government keeps it simple. Buyers pay a flat 5% GST, and builders do not give back any tax discounts. This removes confusion and makes your final flat price sheet 100% clear from day one.
How the 1/3rd Land Value Deduction Works Behind the Scenes
By law, the government cannot charge GST on raw land. Under Indian tax rules, the actual GST rate on building a home is 7.5%. However, the government assumes that one-third (33.33%) of your flat's price is the cost of the land.
When you take away one-third from 7.5%, the final GST rate becomes exactly 5% of your total flat price. You do not need to do any hard math for the land cost—just take 5% of your total flat base price.
GST Calculation Table: Prestige Falcon City Reserve Cost Sheet
Prestige Falcon City Reserve is a 41-acre township project in Konanakunte, South Bengaluru, right across from the Konanakunte Cross Metro Station. It has 2,520 luxury flats across 7 tall towers (G+30 floors).
Here is the simple table showing how the 5% GST changes the total cost of 2, 3, and 4 BHK flats at Prestige Falcon City Reserve:
| Configuration | Super Built-Up Area (Sq. Ft.) | Base Starting Price | 5% GST Amount | Total Price (Base + GST)* |
|---|---|---|---|---|
| 2 BHK | 1,204 – 1,274 sq. ft. | ₹1.40 Crore | ₹7,00,000 | ₹1.47 Crore |
| 2.5 BHK | 1,366 – 1,379 sq. ft. | ₹1.55 Crore | ₹7,75,000 | ₹1.6275 Crore |
| 3 BHK (Regular) | 1,830 – 1,890 sq. ft. | ₹2.00 Crore | ₹10,00,000 | ₹2.10 Crore |
| 3 BHK (Large) | 1,900 – 2,140 sq. ft. | ₹2.25 Crore | ₹11,25,000 | ₹2.3625 Crore |
| 4 BHK + Study | 2,450 – 2,726 sq. ft. | ₹3.00 Crore | ₹15,00,000 | ₹3.15 Crore |
*Note: Karnataka Stamp Duty (5%) and Registration Charges (1%) are separate state government fees. You pay them when you register the flat, so they are not included in the GST column above.
How You Pay GST: The 10:10:80 Payment Plan Breakdown
Many homebuyers think they must pay the full GST amount all at once when booking the flat. That is not true. You pay GST in small parts along with the 10:10:80 building payment plan of Prestige Falcon City Reserve.
Let's look at a 3 BHK flat priced at ₹2.00 Crore (Total GST = ₹10 Lakhs) to see how your GST payments are split over the 5-year building time:
- Expression of Interest (EOI) Stage (Pre-Launch): You give a refundable post-dated cheque (₹12 Lakhs to ₹30 Lakhs based on flat size) to hold your spot. Zero GST is charged on this cheque until RERA approves the project and you get your flat number.
- Step 1: Booking Fee (10% of Base Cost): Once RERA is approved and you book your flat, you pay 10% of the base cost (₹20 Lakhs). You pay 5% GST on this payment = ₹1,00,000.
- Step 2: Sale Agreement Signing (10% of Base Cost): Within 30 to 45 days of booking, you pay the second 10% (₹20 Lakhs) when signing the sale agreement. You pay 5% GST on this payment = ₹1,00,000.
- Step 3: Construction Milestones (80% of Base Cost): You pay the remaining ₹1.60 Crore in steps as the building goes up—digging the base (10%), pouring floor slabs up to Floor 30 (40%), brick walls and plastering (10%), flooring and wiring (10%), and getting your keys (10%). Every time the builder asks for a 10% payment (₹20 Lakhs), you pay ₹1,00,000 in GST with it.
GST on Extra Charges: Clubhouse, Floor Rise & Maintenance
When you check your final price sheet at Prestige Falcon City Reserve, remember that the 5% GST rate is only for the main flat price. Other extra services on your price sheet have an 18% GST rate because the tax office counts them as separate services:
- Floor Rise & Preferred Location Charges (PLC): If you choose a corner flat facing the park or a flat on a higher floor in the G+30 towers, these fees are added to the main building cost and usually have 5% GST (or 18% if billed on a separate receipt).
- Clubhouse Membership & Amenities Fee: Taxed at 18% GST.
- BESCOM (Power) & BWSSB (Water) Connection Charges: Taxed at 18% GST.
- Advance Maintenance Deposit: The 1-year advance care fee paid before the December 2031 handover has 18% GST.
- Corpus / Sinking Fund: This is emergency money saved for big building repairs in the future. Because it is a savings deposit and not a service, it has 0% GST.
- Stamp Duty (5%) & Registration (1%): Paid straight to the Government of Karnataka. There is 0% GST on state registration fees.
Under-Construction (5% GST) vs. Ready-to-Move (0% GST): Why Buy Early?
Buyers often ask: "Why shouldn't I wait until December 2031 when Prestige Falcon City Reserve is fully built and gets its Occupancy Certificate (OC) so I can pay 0% GST?"
While ready-to-move flats with an OC have zero GST, waiting until the project is finished will cost you much more money on Kanakapura Road:
- Pre-Launch Price Advantage vs. 5% Tax: Buying during the launch stage locks in your price at around ₹11,200 to ₹11,500 per sq. ft. (₹1.40 Crore for a 2 BHK). By the time the project finishes in 2031, property prices near the Green Line Metro usually go up by 35% to 50%. Paying 5% GST today saves you from paying 40% more on the flat price later.
- Best Inventory Selection: Buyers who book early while the project is being built get the first choice of Vaastu-friendly layouts, park-facing balconies, and their favorite floor numbers across the 7 towers.
