Most new flats in Pune attract 5% GST while they are under construction, but some small homes are charged just 1%. The cost sheet for Smarto Tower, where studios cost ₹26 lakh to ₹40 lakh, applies the 1% rate. This explainer covers when the lower rate applies, what it saves, and how to check it on your own quote.
This is general guidance on GST rules as they stand; confirm the rate on your agreement with the developer and a tax adviser.
In short: an under-construction home counts as "affordable" for GST, at 1%, if its carpet area is up to 90 sq m in cities like Pune (60 sq m in the six largest metros) and its value is up to ₹45 lakh. Otherwise the rate is 5%. Neither rate allows the developer input tax credit, and ready homes with a completion certificate attract no GST.
The two rates
- 1%: affordable housing, meaning a carpet area of up to 60 sq m in the metropolitan cities (Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata and Mumbai region) or up to 90 sq m elsewhere, including Pune, and a gross amount of up to ₹45 lakh.
- 5%: all other residential flats under construction.
Both conditions must be met for the 1% rate. A 600 sq ft flat in Pune priced at ₹48 lakh, for example, is small enough but too expensive, and attracts 5%.
What it saves
On Smarto Tower's 307 sq ft studio, with an agreement value of ₹40.06 lakh, GST at 1% is about ₹40,000; at 5% it would be about ₹2 lakh. On the 202 sq ft studio at ₹26.36 lakh, the difference is about ₹1 lakh. That matters on a small ticket, and especially to an investor working out a rental yield.
How to check your quote
- Confirm the carpet area in square metres on the agreement and check it is within the limit.
- Check that the value used for the ₹45 lakh test is the gross amount, not just the base price.
- Make sure the GST line on the cost sheet matches the rate and the agreement value.
- Remember that GST applies only while the home is under construction; a home bought after the completion certificate attracts none.
Other costs that do not change
Stamp duty (generally 7% in Pune's urban areas) and registration (1%, capped at ₹30,000) are the same whatever the GST rate. On Smarto Tower's cost sheet, these take a ₹26.36 lakh studio to ₹28.78 lakh in total.
Before you buy any small home
- Get the MahaRERA registration and check it with our MahaRERA checklist.
- Compare the rate per sq ft with larger flats; small homes usually cost more per sq ft.
- For rental, compare the yield with fixed-rent options such as those in our Baner studio comparison.
For Smarto Tower specifically, see our price guide and floor plan guide. Other new projects nearby are on our Tathawade page, and the developer's on the Nirman Greens page.
1% GST on small homes: frequently asked questions
When is GST 1% on a flat in Pune?
When the flat is under construction, its carpet area is up to 90 sq m and its gross value is up to ₹45 lakh.
What is the GST rate on other under-construction flats?
5%, without input tax credit.
Is GST charged on ready-to-move flats?
No, not on homes sold after the completion certificate.
Is the 60 sq m limit relevant in Pune?
No. The 60 sq m limit applies in the six largest metropolitan regions; Pune uses the 90 sq m limit.
How much does 1% GST save on a ₹40 lakh studio?
About ₹1.6 lakh compared with 5%.
Does the GST rate change stamp duty?
No. Stamp duty and registration are calculated separately.
