Do society members pay GST on extra area bought in redevelopment?
Extra area bought from the developer is a purchase of construction service, so GST follows it. Here is how the 1% and 5% rates work, what "affordable" really requires in MMR, and the completion-certificate point members most often get wrong.
If your society is redeveloping and you have agreed to take area over and above your free entitlement, that extra area is bought with money — and GST is payable on it. It is one of the costs members most often overlook while signing the agreement.
Why is GST charged on the extra area but not on the free area?
Nothing is charged to you on the free rehabilitation area for a simple reason: you pay the developer nothing for it. Please do not repeat the popular line that the entitled area is "GST exempt" — that is inaccurate. The moment you pay for additional carpet, you are buying a construction service, and GST attaches to that payment. Before you agree to any figure, check what you are actually buying with our carpet to built-up converter, because offers are often quoted in built-up terms.
Is the rate 1% or 5%?
Under Notification No. 03/2019-Central Tax (Rate) dated 29 March 2019, amending Notification No. 11/2017-Central Tax (Rate) dated 28 June 2017 and effective 1 April 2019, the effective rate is 1% of the total amount charged if the flat qualifies as an affordable residential apartment, and 5% otherwise — in both cases with no input tax credit for the developer. "Affordable" needs both tests to be met:
- carpet area not exceeding 60 sq m (about 646 sq ft), tested on the rebuilt flat, not merely the extra portion; and
- a gross amount charged of not more than Rs 45 lakh, which also sweeps in the land component and preferential location, development, parking and common facility charges.
The notification defines Mumbai as the whole of MMR, so the 60 sq m limit — not 90 sq m — applies in Thane, Navi Mumbai, Kalyan-Dombivli and Mira-Bhayandar too. In practice, most MMR extra-area purchases attract 5%, because one of the two limits is crossed. GST 2.0 changed nothing here: Notification No. 15/2025-Central Tax (Rate) dated 17 September 2025 left these rates untouched.
How the bill is actually built
GST is charged on the construction service, not on the land. The scheme deals with that by deeming one third of the amount charged to be the value of land, and taxing the remaining two thirds. That is why the same transaction can be described either as a rate on two thirds of the value, or as a lower effective rate on the whole.
Worked example — both routes give the same answer
Amount charged for the extra area: Rs 30,00,000.
Deemed land value, one third: Rs 10,00,000. Taxable value = Rs 20,00,000.
Route A — rate on the taxable value: 20,00,000 × 7.5% = Rs 1,50,000
Route B — effective rate on the full amount: 30,00,000 × 5% = Rs 1,50,000
Identical — so check which basis a builder’s invoice is using before arguing about the rate
Verify the GSTIN in two minutes. Use the Search Taxpayer facility on the GST portal. A valid GSTIN is 15 characters, begins with the state code (27 for Maharashtra), carries the same PAN as the entity signing your agreement in characters 3 to 12, and shows status Active. A mismatch between the PAN on the invoice and the PAN on your agreement is worth resolving before you pay.
Does paying after the completion certificate help?
It can. Paragraph 5(b) of Schedule II of the CGST Act 2017 excludes a transaction where the entire consideration is received after the completion certificate is issued or after first occupation, whichever is earlier, and entry 5 of Schedule III puts it outside the scope of GST altogether. The word "entire" is the trap — a single rupee of booking advance paid earlier makes the whole amount taxable. Whether a given payment schedule truly meets this test is frequently argued between members, developers and the department, so record the timing in writing and have a chartered accountant review your own facts. Our GST on redevelopment page and the possession and corpus guide take this further.
Work it out for your own society
Developers quote extra area in built-up or saleable terms; GST and your entitlement follow carpet. Convert the figures before you agree to a price.
Open the Carpet to Built-up Area ConverterCommon questions
Is GST payable on my free entitled area in redevelopment?
No amount is charged to you on the free rehabilitation area, because you pay the developer nothing for it. Avoid calling it "exempt" — that description is wrong. GST arises only where you actually pay for extra area.
When is the 1% rate available instead of 5%?
Only where the flat qualifies as an affordable residential apartment: carpet area of the rebuilt flat not exceeding 60 sq m (about 646 sq ft) and a gross amount charged of not more than Rs 45 lakh. Both tests must be met.
Does the 60 sq m limit apply outside Mumbai city?
Yes. The notification defines Mumbai as the whole of MMR, so the 60 sq m limit — not 90 sq m — applies across Thane, Navi Mumbai, Kalyan-Dombivli, Mira-Bhayandar and the rest of MMR.
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