The short answer
A ready-to-move flat is a finished building with a completion or occupancy certificate. You can see exactly what you are buying, move in or let it out straight away, and pay no GST if the whole price is paid after the certificate is issued. You usually pay more for that certainty, and the choice of units is limited to what is left or what owners are selling.
An under-construction flat is a promise: a registered project, a plan and a possession date. It is often priced below comparable ready stock in the same area, you can choose the floor and facing, and the building is new when you move in. In exchange you carry the risk that the project is delayed or changed, you pay GST on instalments, and if you live on rent while paying a loan, you pay both at once.
If you need a home soon, want to avoid builder risk, or cannot afford rent and EMI together, ready-to-move is usually the safer fit. If you can wait, the builder has a record of delivering on time, the project is properly registered under RERA and the price gap is large enough to pay for the risk and the GST, under-construction can make sense. This guide sets out each factor; our under-construction buying guide goes deeper into RERA checks and payment plans.
Price: is under-construction really cheaper?
Builders often price early phases below the expected rate at completion, to raise money and build momentum, and raise prices as construction progresses. So an under-construction flat can cost less per square foot than a ready one nearby. But the gap is not fixed, and it is not always there: in some markets, ready stock in older projects sells below new launches because buyers pay a premium for newer buildings and amenities.
Compare like with like. Put both flats on the same basis: price per square foot of carpet area, with GST, parking, club and preferential location charges, maintenance deposits and stamp duty added. A 'discount' on a launch price can disappear once GST and add-on charges are counted, and a ready flat's price may include fittings that a new one will need you to buy.
Then put a value on time and risk. Money paid into an under-construction flat earns nothing until possession and is exposed to delay. A smaller saving is not worth a three-year wait in a project whose builder has missed dates before.
GST: the cost only one of them carries
GST applies to the sale of a residential unit that is still under construction. For ordinary residential units the rate is 5 per cent without input tax credit; for affordable housing it is 1 per cent without input tax credit. Affordable housing here means a carpet area of up to 60 square metres in metropolitan cities or 90 square metres elsewhere, and a gross amount charged of not more than ₹45 lakh; both conditions must be met. These rates were not changed by the GST rate changes effective 22 September 2025.
No GST applies where the entire consideration is received after the completion certificate is issued by the competent authority, or after first occupation, whichever is earlier (Schedule III of the CGST Act, 2017). That is why a finished flat bought from the builder after the certificate, or any resale flat bought from an owner, carries no GST.
Watch the edge cases. If a builder sells an 'almost ready' flat and collects part of the price before the certificate and part after, GST applies to the part received before. Ask whether the certificate has been issued, see a copy, and match the payment dates to it.
Cash flow: pre-EMI, and paying rent and EMI together
With an under-construction flat bought on a loan, the lender disburses in stages as construction progresses. Until the final disbursement you can pay only the interest on the amount disbursed so far (pre-EMI), or start full EMIs on the disbursed amount so that principal starts falling. Pre-EMI keeps the outgo low early on but does not reduce the loan; if possession is delayed, you can pay interest for years without repaying anything.
Meanwhile, if you live in a rented home, you keep paying rent. Rent plus pre-EMI or EMI, for the whole construction period, is the real monthly cost of an under-construction purchase. Many buyers budget for the EMI and forget the rent, then struggle when possession slips by a year.
A ready flat moves you straight to a full EMI and, if you live in it, ends your rent. If you let it out, the rent begins immediately. Our pre-EMI vs full EMI calculator shows how the two repayment choices compare over the construction period, and the RERA delay interest calculator works out what a delayed builder owes you.
Be careful with subvention or 'no EMI till possession' schemes. The loan is still yours even if the builder agreed to pay the interest; if the builder stops paying, the lender comes to you. In 2019 the National Housing Bank told housing finance companies to link disbursement to construction stages and stop loan products in which builders service buyers' dues.
RERA protection for under-construction buyers
The Real Estate (Regulation and Development) Act, 2016 (RERA) applies to under-construction projects. Projects must be registered with the state authority, sales are on carpet area, a builder cannot take more than 10 per cent of the cost as an advance before a registered agreement for sale (section 13), and 70 per cent of buyers' money must be kept in a separate account and used for that project's land and construction (section 4(2)(l)(D)).
If the builder fails to give possession by the date in the agreement, section 18 lets you choose: withdraw and get a refund of what you paid with interest at the rate in your state's rules, plus compensation; or stay and receive interest for every month of delay until possession. Changes to the sanctioned plan or specifications need your consent, and changes to the overall layout need the written consent of at least two-thirds of the allottees (section 14). Structural and workmanship defects reported within five years of possession must be fixed free (section 14(3)).
These remedies are real, but they take time and depend on the builder's ability to pay. Check the project on the state RERA portal before booking: the registration, the declared completion date, the quarterly progress updates, and any complaints or orders. Our RERA number guide explains how to find and read the record in each state.
For a ready flat, the five-year defect liability under section 14(3) runs from the original possession, so in a building that is already several years old little or none of it may be left. Your main protection is your own inspection and the documents.
What you see is what you get
A ready flat can be inspected: the actual light at different times of day, the view, water pressure, noise from the road, the quality of finishes, seepage after rain, lift waiting times, parking, and how the society is run. You can talk to residents and read the society's accounts and minutes.
An under-construction flat is judged from a sample flat, a brochure and a plan. Sample flats are often built with better fittings and furniture than the specification, and in a different orientation. The final unit can differ in ways that are allowed by the agreement. Read the specification schedule, not the sample flat.
At possession of an under-construction flat, inspect thoroughly and record defects in writing before you sign the possession letter. Our possession handover checklist lists what to check. RERA also expects the buyer to take possession within two months of the occupancy certificate being issued (section 19(10)), so plan your inspection and your loan's final disbursement in time.
Home loan tax rules
Under the old tax regime, interest on a home loan for a house you live in is deductible up to ₹2 lakh a year under section 22 of the Income-tax Act, 2025 (formerly section 24(b) of the 1961 Act), and principal repaid counts towards the ₹1.5 lakh limit under section 123 (formerly section 80C). Neither is available for a home you live in under the new regime (section 202, formerly section 115BAC).
For an under-construction flat, no interest deduction is allowed while it is being built. Interest paid before the year of completion (pre-construction interest) is claimed in five equal instalments starting from the year the construction or acquisition is completed, within the same overall limit for a self-occupied home. The ₹2 lakh limit applies only if the acquisition or construction is completed within five years from the end of the year in which the loan was taken; otherwise the limit for a self-occupied home is far lower. A long delay therefore costs you tax relief as well as time.
Principal repaid also qualifies for the section 123 deduction only once the house is acquired or constructed. With a ready flat, both deductions start in the year you begin repaying. Stamp duty and registration, which count towards the same ₹1.5 lakh limit in the year paid, apply to both. Our home loan tax benefits guide and the home loan tax benefit calculator show the numbers.
Side by side
Price: ready — usually higher per square foot for comparable new stock, fixed and visible; under-construction — often lower at launch, but add GST, add-on charges and the cost of waiting.
GST: ready — none if the whole price is paid after the completion certificate or first occupation; under-construction — 5 per cent, or 1 per cent for affordable housing.
Cash flow: ready — full EMI straight away, rent stops or rental income starts; under-construction — pre-EMI or partial EMI plus your current rent until possession.
Risk: ready — what you see is what you get; under-construction — delay, plan changes or a stalled project, with RERA remedies that take time.
Choice: ready — limited to remaining or resale units; under-construction — choose floor, facing and layout early.
Tax: ready — interest and principal deductions from the first year of repayment under the old regime; under-construction — pre-construction interest in five instalments after completion, and the higher interest limit only if completed within five years.
Building age: ready — may be a few years old with its society already formed; under-construction — new at possession, with a society still to be formed.
Which to choose if…
You are paying rent and cannot carry rent plus EMI for three years: ready-to-move.
You need the home by a fixed date, for a school year or a job move: ready-to-move. Possession dates slip more often than they are met early.
You can wait, the builder has delivered earlier projects on time, and the price gap after GST is substantial: under-construction, on a construction-linked payment plan.
You are buying to let: ready-to-move gives rent from day one; under-construction gives nothing until possession and fit-out.
You want a particular floor or facing in a new project: under-construction, early in the project, with the unit number in the registered agreement.
You are near the affordable housing limits: check whether the flat qualifies for 1 per cent GST and for any state stamp duty concession before comparing.
Common mistakes
Comparing a ready flat's all-in price with an under-construction flat's base price, without GST, parking and club charges.
Budgeting for the EMI and forgetting the rent you keep paying until possession.
Paying more than 10 per cent of the cost on an allotment letter, before a registered agreement for sale.
Treating a 'ready' flat as GST-free without seeing the completion or occupancy certificate and checking the payment dates.
Choosing a subvention scheme without reading what happens if the builder stops paying the interest.
Signing a possession letter, or a letter accepting a revised possession date, without reading it.
Common questions
Is GST payable on a ready-to-move flat?
No, if the entire price is paid after the completion certificate is issued or after first occupation, whichever is earlier. Any part paid before that attracts GST at 5 per cent, or 1 per cent for affordable housing.
Is an under-construction flat cheaper than a ready one?
Often at launch, but not always. Compare on carpet area with GST, add-on charges and stamp duty included, and put a value on the wait and on delay risk.
What happens if the builder delays possession?
Under section 18 of RERA you can withdraw and claim a refund with interest at the rate in your state's rules, plus compensation, or stay and claim interest for every month of delay until possession.
Can I claim home loan interest during construction?
Not during construction. Under the old regime, interest paid before completion is claimed in five equal instalments from the year of completion, within the annual limit for a self-occupied home.
What is the affordable housing GST rate and limit?
1 per cent without input tax credit, for a carpet area up to 60 sq m in metropolitan cities or 90 sq m elsewhere, and a price up to ₹45 lakh. Both conditions must be met.
Should I pay pre-EMI or full EMI on an under-construction flat?
Pre-EMI keeps early payments low but does not reduce the loan. Full EMI on the disbursed amount starts repaying principal. If you can afford it, full EMI shortens the loan; the pre-EMI vs full EMI calculator compares the two.
Sources
- Real Estate (Regulation and Development) Act, 2016 — sections 4(2)(l)(D), 13, 14, 18 and 19(10) (indiacode.nic.in); checked 2 October 2026
- Notification No. 11/2017-Central Tax (Rate) as amended from 1 April 2019 (5 and 1 per cent rates; affordable housing definition), and Schedule III, paragraph 5 of the CGST Act, 2017; rates unchanged by the GST changes effective 22 September 2025; checked 2 October 2026
- Income-tax Act, 2025, sections 22, 123 and 202 (formerly sections 24(b), 80C and 115BAC of the 1961 Act), in force from 1 April 2026 — pre-construction interest in five instalments and the five-year completion condition (indiankanoon.org; incometax.gov.in); checked 2 October 2026
- National Housing Bank, Policy Circular No. 96/2019-20, 19 July 2019 (nhb.org.in); checked 2 October 2026
Last checked 2026-10-02.