Under-Construction Flat in Bangalore: Is GST on Parking, Clubhouse and PLC Charged Correctly?
Read the fine print of a new apartment still being built in this city and the price turns out to be a stack of smaller charges. Some pay for the home, some for facilities, some for convenience, and a GST amount follows each one. Whether every amount is right is a fair question, and the headings below follow what buyers ask most.
How Much GST Does the Flat Itself Attract?
Before the project obtains its completion or occupancy certificate, the agreement value of a flat attracts 5%, and the developer is denied input tax credit on it. Affordable housing is charged 1% instead. Those two rates are the yardstick for judging every other line.
A ready home is treated differently. Pay the entire price once the certificate exists, and GST is not due on the flat or on its extras. Stamp duty and registration are state levies and never attract GST.
Why Extras May Follow the Flat's Rate
GST law has an idea called composite supply. Where several items are sold as a natural set, the principal one fixes the rate for all of them. Where a home is being built, the principal one is construction itself.
A line of its own on the cost sheet, then, does not amount to a service of its own. A charge that exists only because of this flat, and is meaningless without it, normally takes the flat's rate.
Is PLC Taxed at 18%?
That should not happen when it is paid with the flat. The preferential location charge is a premium for a better unit, say one on a corner or facing a park. Some developers billed it at 18%, as if it were a service sold alone, and the GST Council took the matter up on 9 September 2024.
Clarity came with a circular dated 11 October 2024, bearing the number 234/28/2024-GST. The circular puts a location charge collected together with the flat's price, before the completion certificate, into one construction supply, so the usual 5% applies (1% for affordable housing). A High Court in the north, Punjab and Haryana, has also held that PLC is not a service on its own.
Floor rise, facing and view charges rest on the same logic, since each one adds to the cost of a particular home. A line at 18% for any of them is worth querying.
What About the Clubhouse Charge?
Plenty of local projects ask every buyer for a single payment towards the clubhouse and amenities, written into the sale agreement. The money goes towards the shared facilities that the project builds. Collected before completion, it counts as part of what the home costs and carries the same GST.
Later fees are different. A club operator who bills residents for an annual subscription or for classes after they move in is providing a separate service, taxed on its own.
Where the Parking Question Gets Complicated
Car parking is the only line where the position is still contested, with two views in circulation. The agreement's wording usually shows which one fits.
A slot sold as part of the flat
A covered slot allotted in the very agreement that sells the flat is generally treated as a further part of the whole, and it bears the same 5% or 1% as the home does. Local developers mostly bill it in this manner.
A slot that the buyer may or may not take
A 2023 ruling from West Bengal's advance ruling body concerned a scheme in which each buyer could opt for a parking space, at its own price. The body held the parking right to be a separate supply taxed at 18%, a view confirmed on appeal within the state. Because an advance ruling binds nobody but the applicant and its tax authority, it is a caution and not a general rule.
Suppose the car park costs Rs. 4 Lakhs. The GST bill would be Rs. 20,000 at the lower rate and Rs. 72,000 at the higher. A buyer who is billed the higher rate may reasonably request an explanation in writing.
Common Lines at a Glance
One table gathers the answers for a home still under construction.
| Charge | How GST usually applies |
|---|---|
| The flat itself | 5% (1% for affordable homes) |
| Preferential location charge | Same as the flat |
| Higher floor, facing or view | Same as the flat |
| Single clubhouse or amenity payment | Follows the flat when the same agreement covers it |
| Parking given with the flat | Usually the same as the flat |
| Parking taken as an optional extra | Disputed, and taxed at 18% in some rulings |
| Stamp duty and registration | Outside GST |
Charges After Handover
Upkeep after possession is not part of the purchase. Where collections are Rs. 7,500 or less per member per month, no GST is due. Above that, the full figure is charged at 18%, provided the association's turnover for the year exceeds Rs. 20 Lakhs.
Maintenance money that the developer collects ahead of time, at handover, is a service charge by itself and is outside the price of the flat. GST at 18% is usual, and the line should be shown on its own.
A Short Review Before Signing
Developers cannot change the rate, but buyers can check that it was applied correctly. Obtain a cost sheet showing GST against every charge, and find out whether the flat is at 5% or 1%. Premiums for location, floor rise and view should match the flat's rate, and the clubhouse payment should be recorded in the sale agreement.
See how the parking is described, and request the reason behind any line at 18%, in writing. Each instalment's tax invoice belongs in the purchase file. For a modest fee, a chartered accountant can go over the cost sheet, and the EMI calculator helps compare the tax-inclusive price with the loan. For a project in Bangalore, our team is reachable through the contact page.
