An under-construction home usually costs less upfront and lets you pay in stages, but you wait for possession, pay GST and take on delay risk. A ready-to-move home costs more per square foot in many projects, but you see exactly what you are buying, pay no GST once the completion certificate is issued, and can move in or rent it out immediately. The right choice depends on your timeline, cash flow and appetite for risk.
Key takeaways
- GST of 5% (1% for affordable housing) applies to under-construction homes; there is no GST on a unit sold after the completion certificate.
- RERA gives under-construction buyers real protections, including disclosures, fund controls and interest for delay.
- With an under-construction home you may pay rent and pre-EMI interest together until possession.
- A ready home lets you inspect quality, check the completion certificate and start using it at once.
Side-by-side comparison
| Factor | Under-construction | Ready-to-move |
|---|---|---|
| Price | Often lower at launch; stage-wise payments | Often higher; full payment at purchase |
| GST | 5% without input tax credit; 1% for affordable housing | None if sold after the completion certificate |
| Stamp duty and registration | 7% + 2% in Tamil Nadu | 7% + 2% in Tamil Nadu |
| Possession | Months or years away; delay risk | Immediate |
| Quality check | Based on plans, brochures and sample flat | You inspect the actual home |
| Customisation | Some changes possible early | Limited |
| Rental income | None until completion | Can start at once |
| Home loan | Disbursed in stages; pre-EMI interest | Full EMI from the start |
Under GST rules, “affordable housing” for the 1% rate means, broadly, a home with carpet area up to 60 sq m in metropolitan cities or 90 sq m elsewhere, and a value up to ₹45 lakh. Confirm eligibility with the builder.
RERA protection for under-construction buyers
The Real Estate (Regulation and Development) Act, 2016, enforced in Tamil Nadu by TNRERA, gives buyers important safeguards:
- Projects over 500 sq m of land or with more than eight units must be registered before they are marketed, with approved plans and a completion date on record.
- Builders must keep 70% of amounts collected from buyers in a separate account used for that project’s land and construction costs.
- Sale is on carpet area, and the builder cannot take more than 10% of the price before a registered agreement for sale.
- If possession is delayed, you can claim interest for the delay or withdraw and seek a refund with interest.
- The builder must fix structural defects reported within five years of possession.
Always check the project on the TNRERA portal. Our guide to delayed possession remedies explains what to do if timelines slip.
What a ready home offers
- Certainty: what you see is what you get. Check light, ventilation, water pressure, seepage and finishes.
- No GST: provided the completion certificate was issued before the sale.
- No double outgo: no need to pay rent and EMI together.
- Neighbourhood known: you can see who lives there, how the association runs and what maintenance costs.
Insist on the completion certificate, building approval and title documents, and use our snag list for possession. For resale homes, follow the resale checklist.
Tax angles
- Interest before possession: under the old tax regime, interest paid on a home loan before construction is completed can be claimed in five equal instalments from the year of completion, within the overall annual limit for a self-occupied home (the familiar section 24(b)). The new regime does not allow this deduction for a self-occupied home.
- Capital gains reinvestment: if you are using gains from a sale to buy a new home, the exemption (familiar section 54) requires construction to be completed within three years of the sale, or a purchase within specified timelines. A delayed project can put this at risk.
- New law: the Income-tax Act, 2025 has replaced the 1961 Act from 1 April 2026 and renumbered these provisions. Check current references with your chartered accountant.
Who should choose which?
Under-construction suits you if
- You do not need to move in for a few years and can manage rent alongside pre-EMI.
- You want to spread payments and possibly benefit from launch pricing.
- The builder has a strong delivery record and the project is TNRERA-registered.
Ready-to-move suits you if
- You need a home now, or want rental income immediately.
- You want to avoid GST and delay risk.
- You prefer to inspect the actual unit before paying.
Final word
Compare the total cost, including GST, rent paid while you wait and loan interest, not just the price per square foot. Browse flats and apartments in Coimbatore, both ready and under construction, and ask us to help you compare.
Frequently asked questions
Is GST payable on a ready-to-move flat?
No, provided the completion certificate was issued before the sale. GST applies only to under-construction homes, at 5% or 1% for affordable housing.
What protection do I have if an under-construction project is delayed?
Under RERA you can claim interest for every month of delay, or withdraw and seek a refund with interest. Complaints in Tamil Nadu go to TNRERA.
Can I claim tax benefits on an under-construction home loan?
Principal and interest deductions for a self-occupied home start only after construction is complete. Under the old regime, interest paid before completion can be claimed in five equal instalments from that year.
Is an under-construction home always cheaper?
Often at launch, but add GST, rent paid while you wait and pre-EMI interest. The gap with a comparable ready home may be smaller than it looks.
This article is general information as of September 2026, not legal, tax or financial advice. Rules and rates change; confirm with a qualified advocate, chartered accountant or the relevant department before you act.
References
- Tamil Nadu Real Estate Regulatory Authority (TNRERA)
- FAQs on the real estate sector under GST (ClearTax)
- Tamil Nadu stamp duty and registration fee structure (TN Single Window Portal)
- Income-tax Act, 2025 (overview)
Deciding between ready and under-construction?
Our Coimbatore team can shortlist TNRERA-registered projects and ready homes in your budget and compare the full cost with you.
