GST On Ready-To-Move Vs Under-Construction Homes: Which Option Saves More?
Under-construction homes are reclaiming buyer interest as GST reforms cut costs and boost transparency, making them more affordable and promising than ready-to-move-in properties.
By Sheeshram Yadav
Gone are the days when ready-to-move-in (RTMI) homes dominated the wish lists of Indian homebuyers. Over the past few years, under-construction (UC) properties have gradually regained demand through increased transparency, timely delivery by branded developers, and also policy reforms. A survey conducted by Anarock has revealed that the demand for RTMI homes has dipped to its lowest level. During the first half of 2025, the ready home demand ratio over new launches fell to 16:29 from 20:25 during the first half of 2024. This change indicates fluctuating buyer confidence and shifting priorities in the real estate market.
With the implementation of the Indian government’s Next-Gen GST Reforms from September 22, the debate over whether ready-to-move or under-construction homes offer better savings has gained renewed attention.
GST Impact on Ready-to-Move Homes
One of the major pull factors for ready-to-move-in properties has always been the non-applicability of Goods and Services Tax (GST). As RTMI homes qualify as completed projects, GST is not levied upon their purchase. Stamp duty and registration fees are only paid by the buyer, which makes the whole process financially simpler.
However, while the lack of GST renders RTMI houses cost-effective on paper, the overall ticket price of these houses is generally greater. The houses tend to come at a premium because of their ready possession, inherent quality, and guarantee against construction delays. So although there is no GST burden, the initial price of ready houses tends to be greater compared to that of their under-construction equivalents.
GST on Under-Construction Homes
Under-construction properties come under the GST range, but the latest changes are likely to alter their cost dynamics significantly. Earlier, buyers of UC homes paid GST at 5 per cent on usual housing (without input credit) and 1 per cent on low-cost housing. On top of that, developers were subjected to heavy taxes on raw materials such as cement, which was levied at 28 per cent tax.
The new GST system is bringing in a simplified two-slab system, reducing GST on cement from 28 per cent to 18 per cent. This cut itself is bound to reduce construction costs by 3-5 per cent. Developers will pass on some of these savings to consumers, perhaps reducing the price of homes by 1-1.5 per cent. For low-cost and mid-segment housing, this could be a big relief and greater affordability for would-be homeowners.
Why Under-Construction Homes are Gaining Ground
The increasing supply of new developments by well-known, listed developers is a key reason for the increasing demand for under-construction homes. Modern-day buyers are more confident in investing in ongoing projects by well-established names that are noted for timely delivery and adherence to regulatory standards. The transparency introduced by regulation reforms like the Real Estate (Regulation and Development) Act (RERA) has also increased confidence in the space.
As construction becomes cheaper with the GST reductions, developers will enjoy greater pricing power. This may mean lower prices for purchasers and enhanced prospects of appreciation in the long run.
Which Option Saves More?
When it comes to immediate savings, ready-to-move-in homes still remain the better bet because of the lack of GST. But this advantage is usually negated by the higher base price of such units. Alternatively, under-construction apartments, even though they attract GST, could turn out to be the more economical option in the longer term. With Next-Gen GST Reforms reducing the cost of construction and enhancing affordability, UC houses are expected to be more value for money, particularly in affordable and mid-segment housing.
In a nutshell, for potential purchasers not in a rush to take possession, under-construction flats now seem to be the wiser option. Added to the lower entry costs, anticipated appreciation, and lower construction costs are their appeal over ready flats.
(The author is the Managing Director of Yugen Infra)
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