Project & Payment
Under Construction vs Ready to Move: Which Should You Buy?
The discount on an under-construction flat is not the discount you think it is. Here is the arithmetic nobody does.
The short answer
Under construction is 10–30% cheaper, but you pay 5% GST and cannot claim your home loan interest deduction until possession. Ready to move costs more, but attracts zero GST, stops your rent immediately, and carries no delivery risk.
Once you do the maths, the gap between them is far narrower than the sticker prices suggest — and for many buyers it closes entirely.
The comparison
| Under construction | Ready to move | |
|---|---|---|
| Price | Typically 10–30% lower | Highest price |
| GST | 5% (1% for affordable housing), with no input tax credit | Nil — if the completion certificate has been issued |
| Possession | 1–5 years away. May slip. | Immediate |
| Risk | Delay, quality shortfall, worst case a stalled project | You can see exactly what you're buying |
| What you see | A brochure, a sample flat, a 3D render | The actual flat, the actual view, the actual neighbours |
| Payment | Staged, over years — easier on cash flow | Full amount at once |
| Rent | You keep paying rent while you wait | Rent stops the day you move in |
| Home loan interest deduction | Cannot claim until possession. Pre-possession interest is claimable in 5 equal instalments after possession, capped within the ₹2 lakh limit. | Claimable from the first year |
| Appreciation | Higher potential — you buy at an earlier price | Lower — the appreciation has largely happened |
| Choice of unit | Wide. Pick your floor, your view. | Whatever is left |
The GST line is the one buyers forget. On a ₹1 crore under-construction flat, 5% GST is ₹5 lakh you do not pay on a ready-to-move flat with a completion certificate. It closes a large part of the price gap.
The maths nobody does
Two identical flats. One under construction, one ready. The under-construction one is 15% cheaper. Obvious choice, surely?
The real cost of each
Ready flat: ₹1,00,00,000. Under-construction equivalent: ₹85,00,000. Possession in 3 years. Current rent ₹30,000/month.
- UNDER CONSTRUCTION
- Price
- ₹85,00,000
- + GST @ 5%
- ₹4,25,000
- + 3 years' rent while you wait
- ₹10,80,000
- − Tax deduction deferred 3 years (approx. value)
- ₹1,80,000
- Effective outlay
- ₹1,01,85,000
- READY TO MOVE
- Price
- ₹1,00,00,000
- + GST
- ₹0
- + Rent
- ₹0 — you move in
- Tax deduction
- From year one
- Effective outlay
- ₹1,00,00,000
Once you count the GST, the rent you keep paying, and the tax deduction you can't claim — the ready flat came out cheaper, and it carried none of the risk.
That won't always be the outcome. If you already own where you live, the rent line vanishes and the arithmetic flips. If the discount is 30% rather than 15%, under construction wins comfortably. The point is not that one always beats the other. The point is to do the sum. Almost nobody does.
The GST gap
Under construction: 5% GST (1% for affordable housing), no input tax credit for you.
Ready to move, with a completion certificate: nil. GST simply does not apply.
On a ₹1 crore purchase that is a ₹5 lakh swing, and it is the single most under-counted number in Indian home buying.
The tax gap
Section 24(b) lets you deduct up to ₹2 lakh a year of home loan interest. On a ready flat, you claim it from year one.
On an under-construction flat you cannot claim anything until possession. The interest you pay meanwhile — often ₹15–20 lakh over three years — becomes "pre-construction interest", claimable afterwards in five equal instalments, and even then inside the same ₹2 lakh cap, not on top of it.
In practice, a large part of it is never effectively claimed at all.
The risk gap
This is the part that doesn't fit in a spreadsheet, and it is the part that matters most.
With a ready flat, you stand in the actual room. You see the actual view. You feel how hot the west-facing bedroom gets at 4pm. You meet the neighbours. You look at how well the three-year-old lobby has been maintained, which tells you exactly how the next twenty years will go.
With an under-construction flat you have a render, a sample flat built to impress, and a promise.
RERA has made that promise far more enforceable than it was. It has not made it certain.
So which should you buy?
| Buy under construction if… | Buy ready to move if… |
|---|---|
| You already own where you live, so there's no rent to keep paying | You're currently renting |
| The discount is genuinely large — 25%+, not 10% | The discount is modest |
| You have a long horizon and don't need to move | You need to move within a year |
| The builder has a clean, verifiable delivery record | The builder is unproven, or has any delay history |
| You want a specific floor, view or orientation | You'd rather see exactly what you're getting |
| You can comfortably absorb a two-year delay | A two-year delay would hurt |
Nobody can make this decision for you. But do the arithmetic above before you make it — with your actual rent, your actual tax bracket and the actual discount on offer.
Frequently asked questions
Is it better to buy under construction or ready to move?
It depends on two things most buyers never calculate: whether you're currently paying rent, and how large the discount really is. Under construction attracts 5% GST and defers your tax deduction until possession. Ready to move attracts zero GST and stops your rent immediately. Once you count those, a 15% discount can be worth almost nothing — while a 30% discount is still clearly worth having.
How much GST do I pay on under construction property?
5% of the purchase value, or 1% if it qualifies as affordable housing, with no input tax credit. A ready-to-move flat with a completion certificate attracts no GST at all. On a Rs 1 crore purchase that's a Rs 5 lakh difference.
Is under construction cheaper than ready to move?
On the sticker price, yes — typically 10% to 30% cheaper. On the effective cost, often much less, once you add the 5% GST, the rent you keep paying while you wait, and the tax deduction you can't claim until possession.
Can I claim tax benefit on an under construction flat?
Not until possession. Interest paid during construction becomes 'pre-construction interest', claimable afterwards in five equal annual instalments — but within the same Rs 2 lakh Section 24(b) cap, not in addition to it. A large part of it often goes effectively unclaimed.
What is the biggest risk with under construction property?
Delay. Not fraud, not collapse — simply that possession comes two years late, and you spend those two years paying rent and EMI simultaneously. That double payment is what quietly breaks household budgets, and it's far more common than a project failing outright.