GST on Parking, Clubhouse and PLC Charges on an Under-Construction Flat
The cost sheet of an under-construction flat in Bangalore carries more than a base price. Car parking, clubhouse membership, a preferential location charge (PLC) and floor rise each appear on a line of their own, and each line carries GST. This guide explains which rate applies to each of these charges, why car parking is the one that needs a closer look, and how to check the tax column before signing.
The Tax on the Flat Itself
GST applies to a flat only while it is under construction. A home booked before the project receives its completion or occupancy certificate is taxed at 5% of the agreement value, with no input tax credit for the developer. A flat that qualifies as affordable housing is taxed at 1%.
A completed flat is treated differently. When the whole price is paid after the completion or occupancy certificate is issued, GST does not apply to the sale or to any charge that comes with it. Stamp duty and the registration fee are state levies and carry no GST in either case.
What a Composite Supply Means
GST law treats goods or services that are naturally sold together as one composite supply. The principal supply, meaning the main element, sets the tax rate for the whole bundle. For a flat under construction, the principal supply is the construction service.
The idea matters because a cost sheet splits one purchase into many lines. A separate line does not create a separate service. A charge that is part of buying the flat, and cannot sensibly be bought without it, follows the rate of the flat.
PLC, Floor Rise and View Charges
A preferential location charge is the premium for a better-placed home in the same project, such as a park-facing or corner flat. For some years, a number of developers taxed this line at 18%, the rate that applies to a service sold by itself. The GST Council took up the question at its 54th meeting on 9 September 2024.
The clarification that followed is Circular No. 234/28/2024-GST, dated 11 October 2024. It states that a location charge paid along with the price of the flat, before the completion certificate, is part of a composite supply of construction. The location premium is therefore taxed like the home itself: at 5%, or at 1% where the home is affordable housing.
The Punjab and Haryana High Court has ruled the same way, holding that PLC cannot be taxed as an independent service. Floor rise and facing or view premiums are priced on the same logic as PLC, as part of the price of that particular home. An 18% rate against any of these lines on an under-construction flat is a point to raise with the developer.
Clubhouse and Amenity Charges
Most Bangalore projects add a one-time clubhouse or amenity charge to the cost sheet. It pays for the shared facilities built with the project, and every buyer pays it under the same agreement as the flat. Collected in this way before completion, it belongs to the price of the home and takes the same tax.
The position changes once the building is occupied. A fee that a club operator charges residents later, such as an annual subscription or a fee for classes, is a separate service with its own tax.
Why Car Parking Needs a Closer Look
Car parking is the one line where the tax treatment is still disputed. Two readings are in use, and the wording of the agreement decides which one fits.
Parking allotted with the flat
Where a covered car park comes with the flat under the same agreement, the charge is generally read as one more element of the same bundle. It then carries 5% or 1%, like the rest of the price. Most developers in Bangalore bill parking this way.
Parking sold as an optional extra
In 2023 the West Bengal advance ruling authority examined a project where buyers could choose whether to take a parking space, at a separate price. It ruled that this parking right was a supply by itself, taxed at 18%, and the state's appellate authority upheld the view. An advance ruling binds only the applicant and the tax office concerned, so it is a warning sign and not a rule for every project.
The difference in rupees is easy to work out. On a car park priced at Rs. 4 Lakhs, GST at 5% is Rs. 20,000 and GST at 18% is Rs. 72,000. A buyer who is charged 18% should ask the developer for the reason in writing.
How the Common Charges Are Taxed
The table sets out the usual GST treatment of each charge on the cost sheet of a flat that is still under construction.
| Charge | Usual GST treatment |
|---|---|
| Base price of the flat | 5%, or 1% for affordable housing |
| Preferential location charge | Rate of the flat |
| Floor rise, facing or view premium | Rate of the flat |
| One-time clubhouse or amenity charge | Rate of the flat when part of the same agreement |
| Car park allotted with the flat | Generally the rate of the flat |
| Car park sold as an optional extra | Disputed, with rulings at 18% |
| Stamp duty and registration fee | Outside GST |
Maintenance After Possession
Monthly maintenance is a separate subject from the purchase. A residents' association is exempt from GST on maintenance of up to Rs. 7,500 a month for each member. Above that figure, GST at 18% applies to the full amount where the association's yearly turnover is over Rs. 20 Lakhs.
Advance maintenance that the developer collects at handover is a service charge in its own right and is not part of the flat's price. It is usually billed with GST at 18%, so it should appear as a separate line with its own tax.
Checks on the Cost Sheet
The GST rate is fixed by law and is not open to bargaining. What a buyer controls is whether each line is taxed at the correct rate. These checks cover the main points:
- Ask for a cost sheet that shows every charge and its GST on a separate line.
- Confirm whether the flat is taxed at 5% or, as affordable housing, at 1%.
- Check that PLC, floor rise and view premiums carry the same rate as the flat.
- See whether the clubhouse charge is written into the sale agreement and taxed like the flat.
- Read how the car park is described: allotted with the flat, or offered as a separate option.
- Ask for a written reason for any 18% line on the purchase side of the cost sheet.
- Keep the tax invoice for every instalment with the purchase papers.
For a large purchase, a chartered accountant's review of the cost sheet costs little against the sums involved. Our EMI calculator helps set the full tax-inclusive price against the planned loan. For help reading the cost sheet of a project in Bangalore, contact our team.