There are two ways to buy a new flat in Bengaluru. You can pay for it while it is being built, in stages, and move in when the builder finishes. Or you can buy one that is already finished, pay when the sale deed is registered, and move in straight away. The flat may be identical. The purchase is not.
The differences come down to four things: the tax on the price, the cost of waiting, who carries the risk if the building runs late, and what you can check before your money goes. This guide works through each on one example, the ₹1 Cr flat from our home-loan guide: a ₹75 lakh loan at an illustrative 8.5% over 20 years, and 36 months from booking to possession.
Neither route is right for everybody. If you already own the home you live in, or can stay with family while the flat is built, you pay no rent in the meantime, and that changes the sums. So does how far off the builder’s date is, and how much of the building is already up. The point is to know what you are paying for on each side.
Two purchases, not one
Buying under construction, you are buying a promise: a sanctioned plan, a specification, a date and a promoter’s record of keeping its word. The flat you will live in does not exist yet, so what you inspect is paper and a sample flat. Buying ready, you are buying a building. You can stand in the flat you will own, and the documents that say it may be lived in already exist.
The sanctioned plan and specifications, a sample flat, and the RERA filing with its quarterly progress reports. The flat itself, its light, its view and its neighbours, you take on trust.
The unit you will own, the occupancy certificate for its tower, the flat’s e-khata, the water and power actually running and, in a building people already live in, how it is being looked after.
That difference runs through everything that follows. On a flat being built you pay GST, you pay interest and possibly rent while you wait, and the date is a risk you carry. On a finished flat most of that falls away. What you give up is paying in stages, and the chance to ask for changes before the flat is finished.
What “ready to move” means
The phrase is used loosely in advertising, but Karnataka’s model agreement for sale defines it, and every builder’s agreement in the state has to follow that model. “Ready to move in possession”, it says, means a flat “in a habitable condition which is complete in all respect”, with the agreed specifications, amenities and facilities, “and for which occupation certificate and completion certificate, as the case may be, has been issued by the competent authority”.
The certificate is the test because the law makes it one. Under the Greater Bengaluru Governance Act, nobody may occupy a new building until the corporation’s Commissioner has given permission, or has failed to refuse it within 30 days of the builder’s completion notice. In December 2024 the Supreme Court directed that electricity, water and sewerage connections be given only once a completion or occupation certificate is produced, and that banks lend against a building only after verifying one. RERA makes the builder responsible for getting the certificate and handing it over, and once it is issued, it gives you two months to take possession.
So when a flat is described as ready, ask for three documents: the occupancy certificate covering your tower, the completion certificate where the builder has one, and the flat’s e-khata, because a sale in Bengaluru cannot be registered without it. Our guide to the documents to check before you buy explains each, including a partial OC that covers some towers and not others. Our guide to the OC and CC explains each certificate in full.
Nearly ready is still unfinished
Between the two sits the building that is almost done: towers up, flats being finished, the builder saying it will be ready in a few months. It feels like a ready flat. In law it is still an under-construction one. There is no certificate, so any payment you make now carries GST, the bank still pays in stages, and the date in your agreement is still a promise, not a fact. Your rights under RERA if it slips are the same as on a building that has just started.
What you gain is less uncertainty. You can often see your actual flat, the date is close, and there is less building left to go wrong. What you should not assume is that nearly finished means nearly certified.
Reading a build figure
The build figure a promoter files with RERA each quarter is its own report, not an inspection. Read the stage breakdown under the headline percentage, and the date the report was filed. Even a figure as high as 88% tells you the frame is up; it does not tell you the building has been inspected and certified. Our guides to reading a RERA filing and to what a possession date means show how to read the figure against the date.
GST on the worked example
A flat bought while it is being built carries GST of 5% of the price, or 1% if it qualifies as affordable housing. The rate is set by law, not by the builder. On the worked example’s ₹1 crore price, 5% is ₹5 lakh, paid a slice at a time with each instalment. GST also applies to charges the builder collects with the price, such as parking and clubhouse fees, which is why our full-cost guide’s example comes to ₹5.15 lakh.
Buy the same flat once it is finished and the GST can be nothing at all. The rule is in the GST law itself. Building a flat for sale is treated as a supply of construction services, and taxed, “except where the entire consideration has been received after issuance of completion certificate” by the competent authority “or after its first occupation, whichever is earlier”. The sale of a finished building falls outside GST altogether. On the worked example, that is ₹5 lakh you do not pay.
Why “ready” can still mean GST
The exemption turns on when the money is paid, not on how finished the flat looks. The words are “the entire consideration”. Pay any part of the price before the completion certificate is issued, even a booking amount, and the exception no longer applies: the sale is taxable, however complete the flat is by the time you move in.
“First occupation” is no way round it either. The tax department’s own guidance says it means first occupation “in accordance with the laws, rules and regulations”, and in Bengaluru lawful occupation needs the occupancy certificate in the first place.
A flat can be finished, furnished as a show flat and advertised as ready while its certificate is still awaited. Pay anything before the certificate is issued and GST is due on the purchase. If avoiding GST is part of the reason you are buying late, see the completion certificate and its date before you pay a rupee, booking amount included.
What the wait costs
On a flat being built, the months between booking and possession cost money that buys you nothing you keep. Two lines are certain if you borrow: GST, and the interest the bank charges on what it has released so far, which banks call pre-EMI. A third depends on how you live now: rent, if you are renting while you wait.
Take the worked example. Your own ₹25 lakh share of the price goes in first, so the bank’s first release comes at month 7, and pre-EMI then runs for 29 months to possession at month 36: ₹8.29 lakh in all. For rent, the example assumes ₹30,000 a month. That is a figure chosen for the arithmetic, not a market rate; put in your own. Over 36 months it comes to ₹10.8 lakh.
₹24.09 lakh to wait
What the same ₹1 Cr flat costs in GST, pre-EMI and rent before you move in, bought under construction or bought ready. Rent is an assumption of ₹30,000 a month. Hover or tab to a bar for how it is worked out.
Show as a table
| Route | GST | Pre-EMI | Rent* | Total |
|---|---|---|---|---|
| Under construction, on time | ₹5 lakh | ₹8.29 lakh | ₹10.8 lakh | ₹24.09 lakh |
| Under construction, a year late | ₹5 lakh | ₹14.24 lakh | ₹14.4 lakh | ₹33.64 lakh |
| Ready, all paid after the certificate | ₹0 | ₹0 | ₹0 | ₹0 |
On time, then, the wait costs ₹24.09 lakh: ₹5 lakh of GST, ₹8.29 lakh of pre-EMI and ₹10.8 lakh of rent. Buy the same flat ready, with the whole price paid after the completion certificate, and all three are nil. You start paying EMIs of ₹65,087 straight away instead of pre-EMI. But those are the same EMIs the under-construction buyer starts at possession, on the same loan over the same 20 years; the ready buyer simply starts, and finishes, three years earlier. What the under-construction buyer pays on top is the three lines above.
Look at the months just before possession, too. By then the bank has released ₹70 lakh of the loan, and the pre-EMI in the worked example reaches ₹49,583 a month. With rent on top, that is ₹79,583 a month going out, against the ready buyer’s EMI of ₹65,087. Near the end, waiting is dearer every month as well as in total.
If handover slips a year
Every month of delay adds a month of rent and a month of pre-EMI at its highest. If the building runs a year late after the bank has made its last stage payment before possession, the example adds ₹3.6 lakh of rent and ₹5.95 lakh of pre-EMI, twelve months at ₹49,583. The wait now costs ₹33.64 lakh. The extra ₹9.55 lakh goes out of your pocket month by month, whatever the builder may later owe you for the delay.
How much more a ready flat can cost
If a finished flat is priced above a similar one still being built, the fair comparison is the price gap against the cost of waiting. Every rupee of extra price also carries 7.6% of stamp duty and registration in city limits. On the worked example, a ready flat can cost up to about ₹22.4 lakh more, paid from your savings, before it costs you more in cash than waiting on time: ₹22.4 lakh plus 7.6% of it is ₹24.09 lakh. Against a flat that ends up a year late, the gap can be about ₹31.3 lakh.
These are cash sums, not adjusted for when each rupee is paid, and they leave out the one thing that is hard to price: on the ready flat, nothing is left to go wrong before you move in.
Delay, and where your money sits
If the builder cannot give possession by the date in your agreement, RERA gives you a choice, which our guide to builder delays works through: withdraw and get your money back with interest, or stay and be paid interest for every month of delay until you get the keys. In Karnataka that interest runs at State Bank of India’s highest lending rate plus 2%. Our guide to what a possession date means covers how to read the date and what to do if it slips.
Two things the remedy does not do. It does not stop your own costs: the bank’s interest and your rent run on while you wait, and the builder’s interest to you is a separate claim. And it rests on the date in your agreement, which is why that date should match the one on the RERA filing before you sign.
The 70% account
RERA also tries to keep your money in your project. To register a project, the promoter has to declare that 70% of the amounts realised from buyers “shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose”. Money can come out only in proportion to how far the project has got, certified by an engineer, an architect and a chartered accountant, and the accounts have to be audited by a chartered accountant every year.
Know its limits. The rule is meant to stop your instalments paying for someone else’s building. It does not guarantee yours will be finished: 30% of what buyers pay sits outside the account, the account can pay for land as well as construction, and withdrawals follow certified progress, not your possession date. On a ready flat the question does not arise, because you pay when the flat is finished.
The loan and the tax
Stage by stage, or all at once
On a flat being built, RBI requires a bank to link its payments to the stages of construction, and bars it from paying up front on an unfinished project. That is why your loan comes out in instalments and you pay pre-EMI in between. Our guide to home loans on a flat being built covers how that works, and the option of paying full EMIs from the first release.
On a finished flat there are no stages left, so the bank can pay the whole loan when the sale deed is registered, and your EMIs start the month after. HDFC Bank, for one, says that on a resale “the complete loan amount is disbursed at the time of execution of a sale deed”. Expect the bank to ask for the OC first: the Supreme Court has directed banks to verify a completion or occupation certificate before lending against a building.
Interest before completion
Under the old tax regime, interest on a loan for a home you live in is deductible up to ₹2 lakh a year, under section 22 of the Income-tax Act, 2025, which replaced section 24(b) of the 1961 Act from April 2026. Interest you pay before the flat is finished, every rupee of pre-EMI included, is not deductible in the years you pay it. It is claimed in five equal instalments, starting in the tax year the flat is completed or acquired.
Two details make that worth less than it sounds. The first is that the ₹2 lakh cap covers the instalments too: the Finance Act, 2026 wrote that into section 22 from 1 April 2026, the day the new Act took effect. On the worked example, pre-EMI of ₹8.29 lakh becomes five instalments of about ₹1.66 lakh. But twelve EMIs on ₹75 lakh carry about ₹6.32 lakh of interest on their own, so the cap is full before the instalments are counted. At 8.5% over 20 years, a year’s interest reaches ₹2 lakh on any loan above about ₹24 lakh.
The second is that the cap drops to ₹30,000 if the purchase or construction is not completed within five years from the end of the tax year you borrowed in. On a loan taken in the tax year ending 31 March 2027, the flat has to be finished by 31 March 2032. A long delay can cost you the deduction as well as the rent.
A ready flat is simpler: the interest counts from the first tax year, within the same cap. Under the new tax regime, which is now the default, none of this helps with a home you live in: the interest deduction for it is not allowed, and a loss from a house cannot be set off against your salary. Check which regime you are in, and ask a chartered accountant before counting on a saving.
Changes, quality and snags
Changes. The one thing only an unfinished flat offers is the chance to shape it before it is done. RERA stops a builder altering your flat’s sanctioned plan and specifications without your consent, but allows “minor additions or alterations as may be required by the allottee”. Minor has a narrow meaning in the Act: it excludes structural change, which the Act says includes cutting into a wall, partition, column, beam or floor, adding area, changing access, and changing the fixtures or equipment. What is left is small. Agree any change in writing, with its price, as part of your agreement.
A finished flat gives you no say before it is built, and a free hand afterwards inside the flat, within the building’s bye-laws. Either way, leave the structure alone.
Quality. Buying under construction, you are relying on the specification in your agreement and on a sample flat, which shows what the builder chooses to show. Read the specification line by line: the make and grade of tiles, fittings, doors, windows and wiring, and whether the sample flat has the standard specification or an upgraded one. Buying ready, you can check the real thing: daylight at different times of day, cross-ventilation, damp patches and seepage marks, the water pressure on your floor, and what the neighbouring buildings do to the view.
Snags. Whichever you buy from a builder, RERA makes it fix any structural defect, or any defect in workmanship, quality or services, that you report within five years of handover, free and within 30 days, and the model agreement repeats the promise. On a ready flat bought from the builder, the five years run from the day it hands the flat to you. Inspect before you take possession, list every defect in writing with photographs and the date, and send the list to the builder.
Side by side
The two routes on one sheet, with the worked example’s figures where there is one.
| Line | Under construction | Ready to move |
|---|---|---|
| What you inspectbefore you pay | The plan, the specification, a sample flat and RERA progress reports | The flat itself, its OC and its e-khata |
| GSTon ₹1 crore | ₹5 lakh, with each instalment | Nil, if all of it is paid after the completion certificate |
| Pre-EMIworked example | ₹8.29 lakh over 29 months | None: EMIs of ₹65,087 from the start |
| Rent while you waitassumed ₹30,000 a month | ₹10.8 lakh over 36 months | None |
| A year’s delay | About ₹9.55 lakh more, while RERA interest is claimed from the builder | Does not arise |
| Your money before handover | 70% of it in the project’s separate account | Paid at registration, for a finished flat |
| The loan | Released stage by stage | Can be released in full at the sale deed |
| Interest deductionold regime, home you live in | Pre-completion interest in five instalments, inside the ₹2 lakh cap | From the first tax year, inside the same cap |
| Changes | Minor, agreed in writing; nothing structural | Your own, after you move in, within the bye-laws |
| Defects | Five years from handover | Five years from the builder’s handover |
| The wait, on time | ₹24.09 lakh | ₹0 on the same flat bought ready |
Before you choose
Whichever way you lean, run the numbers on the actual flats you are comparing, with your own rent and your own lender’s rate, and then check the list for that route.
If you buy under construction
- Price the wait: GST, pre-EMI and any rent to possession, plus a year of slippage, before you compare prices.
- Match the dates: the possession date in your agreement against the one on the RERA filing.
- Read the latest progress report by stage, and note the quarter it was filed in.
- Check each demand against the filed progress before you or the bank pays it.
- Write every agreed change, with its price, into the agreement.
- Keep the five-year tax deadline in view if you are counting on the interest deduction.
If you buy ready to move
- See the completion certificate and its date before you pay anything, booking amount included.
- Ask for the OC for your tower, and which blocks and floors it covers.
- Check the flat’s e-khata, since the sale cannot be registered without it.
- Inspect the actual flat at different times of day: light, ventilation, damp and water pressure.
- Confirm permanent power and water connections, not a temporary supply.
- List the snags in writing, with photographs and the date, before you take possession.
- Weigh the price gap against the cost of waiting, counting 7.6% duty on any extra price.
Sources, checked 10 Sep 2026. GST: Central Goods and Services Tax Act, 2017, Schedule II, paragraph 5(b) (CBIC) and Schedule III, paragraph 5; rates: Notification 11/2017-Central Tax (Rate) as amended by 3/2019, and the Tax Research Unit’s FAQs on real estate of 7 May 2019, questions 1 and 30 (GST Council). “Ready to move in possession”, handover and defect liability: Karnataka RERA Rules, 2017, rule 8A and Annexure A, paragraphs 7.2, 9.1 and 12 (Karnataka RERA); interest for delay: rule 16. RERA: Real Estate (Regulation and Development) Act, 2016, sections 4(2)(l)(D), 11(4)(b), 14(2) and (3), 18 and 19(10) (text). Occupation: Greater Bengaluru Governance Act, 2024, section 241(5) (text); Rajendra Kumar Barjatya v U.P. Avas Evam Vikas Parishad, 2024 INSC 990, paragraph 21(iv) and (xi) (Supreme Court). Loans: RBI (Commercial Banks – Credit Facilities) Directions, 2025, paragraphs 116–117 (RBI); HDFC Bank on disbursal. Tax: Income-tax Act, 2025, sections 21(6), 22 and 202(2), with section 22(2) as amended by the Finance Act, 2026, section 38 (Income Tax Department). Stamp duty and registration, the e-khata requirement and partial OCs: as set out, with sources, in our full-cost and documents guides.
The worked example’s loan, rate and payment plan come from the home-loan guide and are illustrative, and the rent of ₹30,000 a month is an assumption, not a market figure. This is a general guide, not legal, tax or financial advice; have a lawyer read the agreement, and a chartered accountant check the tax, for the flat you are buying.