Ready-to-Move vs Under-Construction Flats Compared
A flat you can walk through today and one that exists only as a plan differ in more than the wait. They differ in tax, risk, loan payouts and what you can check before you pay. This guide compares the two and ends with a checklist for each.
At a glance
| Ready-to-move | Under construction | |
|---|---|---|
| GST | None when the whole price is paid after the completion certificate | 5% (1% for affordable flats) |
| Stamp duty | Same | Same, charged as if the flat were fully built |
| Delay risk | Low, since the building exists | Real, but the law gives you remedies |
| Rent overlap | Usually short | Possible until handover |
| Loan payout | Not tied to construction stages | Released in stages, with pre-EMI interest meanwhile |
| Inspection | You can inspect the actual flat | You check plans, progress and a sample |
Completion and occupancy certificates
The RERA Act defines a completion certificate as one issued by the competent authority certifying that the project was built according to the sanctioned plan, layout plan and specifications. An occupancy certificate (OC) permits people to occupy a building that has civic infrastructure such as water, sanitation and electricity. The promoter is responsible for obtaining the certificate that applies under local law and giving it to buyers or their association.
The Department of Stamps and Registration's FAQ on flats lists confirming that the local authority has issued the occupancy certificate among the precautions when buying. Some projects hold only a partial certificate for the buildings finished so far, so check that yours is covered. After an OC is issued, the Act expects you to take possession within two months.
Price and GST
Compare the total cost, not only the rate per square foot. Stamp duty is calculated on the market value of the fully built flat even if you buy early, so the tax gap between the two is GST. On a ₹1 crore flat, 5% GST is ₹5 lakh. A builder selling a finished flat after the completion certificate charges none, as long as the entire price comes in after that date. Our stamp duty guide has the full sum.
Delay risk and your remedies
Under construction, the date that matters is the possession date in your agreement, which should sit within the project's registered completion date on the K-RERA portal. The registration can be extended, so check the extension entries too.
If the promoter misses the agreed date, the Act lets you withdraw and get your money back with interest, or stay and receive interest for each month of delay. Karnataka's rules set that rate at the State Bank of India's highest marginal cost of lending rate plus two percent, and require refunds within 60 days of becoming due. A buyer can also complain to the authority.
Other protections apply while a project is being built. 70% of buyers' money must sit in a separate project account, no more than 10% may be taken before a registered agreement for sale, and the promoter cannot change the sanctioned plan or agreed fittings without consent, apart from minor changes.
Rent overlap and loan payouts
Banks release money for an under-construction flat in stages. The Reserve Bank's Credit Facilities Directions for commercial banks say disbursal must be closely linked to construction stages and that upfront payouts must not be made for incomplete or under-construction projects, except for some projects sponsored by government or statutory authorities. The same directions warn about schemes where a builder pays your interest or EMI during construction. If the builder defaults, the loan is still yours and your credit record can suffer.
SBI's FAQ describes the pre-EMI option: you pay interest only on the amount released so far, and full EMIs begin after possession. Other lenders' terms may differ.
That creates the overlap. You may pay rent and pre-EMI interest together, and a late handover extends both. Any interest the builder owes you for delay is something you claim, not an automatic credit.
On tax, the Income-tax Act, 2025 deducts interest for the period before the tax year in which the home is bought or built in five equal instalments, starting from that year. For a home you live in, interest is capped at ₹2 lakh a year if construction finishes within five years of the end of the tax year in which you borrowed, and ₹30,000 otherwise (section 22). That deduction is not allowed under the new tax regime (section 202).
Inspection
The Act makes a promoter fix structural and workmanship defects reported within five years of possession, within 30 days. It also treats false statements in advertisements or about model flats as grounds for compensation. For a ready flat, inspect the actual unit. For an under-construction flat, a sample flat is only a sample, so compare it with the sanctioned plan and agreement.
Checklist: under construction
- The project and promoter appear on rera.karnataka.gov.in, with a matching registration number and status.
- The agreement follows Karnataka's prescribed form and states the carpet area, possession date, stage-linked payment schedule and interest for delay by both sides.
- You pay only into the project account, and not more than 10% before the agreement is registered.
- A lawyer has checked the title, sanctioned plan and commencement certificate.
- Your loan sanction letter shows stage-wise release, and pre-EMI terms are in writing.
- You have budgeted for rent and pre-EMI interest beyond the promised date.
- You read the quarterly updates and visit the site to compare progress.
Checklist: ready-to-move
- You hold a copy of the completion or occupancy certificate, and it covers your building.
- The project's status on the K-RERA portal makes sense. Projects that had a completion certificate before the Act began were exempt from registration.
- The sale deed is registered, and your lawyer has checked title, encumbrances and any pending dues.
- The owners' association has been formed and common areas handed over, or you know the plan.
- You have tested water, power, lifts, plumbing, doors, fire safety and leaks in the actual flat.
- The builder confirms in writing that no GST applies.
Key points
- The main tax difference is GST, which applies to under-construction flats and not to flats sold after completion. Stamp duty and registration are the same.
- Delay is the main risk of an unfinished project. Check the registered date, extensions and your agreement's remedies.
- Bank loans for unfinished flats are paid out in stages, so plan for pre-EMI interest and rent together.
- Whichever you choose, check certificates, title and the RERA page before you pay.
Sources
- https://rera.karnataka.gov.in/resources/staticpage/Real_Estate_Act.pdf
- https://rera.karnataka.gov.in/resources/staticpage/KARNATKA_FAQs.pdf
- https://dpal.karnataka.gov.in/storage/pdf-files/16of2016RealEstate(regulationDevelopment)(FirstAmendment)Rules2020.pdf
- https://rera.karnataka.gov.in/viewAllProjects
- https://dpal.karnataka.gov.in/storage/pdf-files/Kanunu%20padakosha%20PDF%20Files/The%20Karnataka%20Real%20Estate%20(Regulation%20and%20Development)%20Rules,%202017%20(Eng).pdf
- https://dpal.karnataka.gov.in/storage/pdf-files/34%20of%201957(E).pdf
- https://igr.karnataka.gov.in/189/registration-of-instruments-relating-to-flats-and-apartments/en
- https://gstcouncil.gov.in/sites/default/files/2024-05/download_2024-05-17t161406.556.pdf
- https://www.gstcouncil.gov.in/sites/default/files/2024-02/faq-real-estate-sector.pdf
- https://www.gstcouncil.gov.in/sites/default/files/2026-10/press_release.pdf
- https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=13156
- https://homeloans.sbi.bank.in/faq
- https://www.incometaxindia.gov.in/w/section-22-211
- https://www.incometaxindia.gov.in/w/section-202-76
- https://www.incometaxindia.gov.in/w/income-from-house-property
- https://www.incometax.gov.in/iec/foportal/help/new-tax-vs-old-tax-regime-faqs
This guide is general information, not legal, tax or financial advice. Rules and rates change; check with a lawyer, chartered accountant or your bank before you decide.