This is one of the first big choices you will face. A ready-to-move flat lets you stop paying rent quickly. An under-construction flat gives you time and staged payments. The right answer depends on your cash, your rent and how much waiting you can live with.
The two options in one line each
- Ready-to-move: built, with an Occupancy Certificate (OC) from the authority. You see exactly what you buy and move in soon after registration.
- Under-construction: you pay in stages while it is built and move in when it is completed.
The tax difference
A flat sold after the OC is issued attracts no GST. An under-construction flat attracts 5% GST for most homes (1% for those that qualify as affordable). Ask the seller for a copy of the OC to confirm.
The rent-plus-EMI test
Say you pay ₹25,000 a month in rent. If you buy under construction and the home takes 24 months, you keep paying that rent, about ₹6 lakh in total, while also paying pre-EMI on the loan released so far. With a ready flat, the rent stops almost straight away and the full EMI starts.
Neither is automatically cheaper. Put both scenarios side by side for your own numbers. Our EMI calculator helps with the loan side.
Risk and peace of mind
- Ready homes: no construction risk, but check for an OC, clear title and that the society or association is formed.
- Under-construction: delay risk, which RERA reduces through escrow and compensation rules. Check the builder's delivery record.
Choice and finish
New projects usually let you pick your floor and unit, and everything is fresh. Ready homes may have fewer units left, but what you see is what you get.
A simple way to decide
- If you must move within six months, look at ready homes.
- If you have stable housing and want to pay gradually, consider under-construction.
- If you are unsure, compare the total cost over three years, including rent, GST and interest.
A worked example: three years side by side
Here is an illustrative comparison. Assume a ₹70 lakh agreement value in both cases, a ₹56 lakh loan at 8.5% for 20 years, and current rent of ₹25,000 a month. These are example numbers only, not prices for any project.
- Full EMI on ₹56 lakh: about ₹48,600 a month.
- Ready-to-move, after the OC: no GST. Rent stops when you move in. Over 36 months you pay about ₹17.5 lakh in EMI.
- Under construction, 24 months to completion: GST at 5% on ₹70 lakh is ₹3.5 lakh. You pay ₹6 lakh in rent over 24 months. If, on average, ₹30 lakh of the loan is out during construction, pre-EMI interest is about ₹21,250 a month, or about ₹5.1 lakh over 24 months. Then 12 months of full EMI is about ₹5.8 lakh.
On these numbers, the under-construction route costs about ₹14.6 lakh in GST, rent and pre-EMI, plus about ₹5.8 lakh of EMI, so about ₹20.4 lakh in three years, against about ₹17.5 lakh of EMI for the ready home. But the EMI on the ready home is also paying down your loan, while rent and pre-EMI interest do not. That is why the totals alone do not settle it. Look at what you own at the end of the three years, as well as what you paid.
Tax points worth knowing
- Interest before possession. Under section 24(b) of the Income-tax Act, 1961, interest paid before the year of completion can be claimed in five equal instalments starting that year, within the overall limit. This applies under the old tax regime for a self-occupied home.
- TDS on purchase. If the property costs ₹50 lakh or more, section 194-IA requires the buyer to deduct 1% TDS from the payment to the seller and deposit it. On ₹70 lakh, that is ₹70,000.
- Affordable housing GST. The 1% rate applies only to homes that meet the government's definition, which caps the carpet area and the value. Ask the seller to confirm which rate applies to your flat, and why.
Step by step: checks for each option
Ready-to-move
- See the Occupancy Certificate and check that it covers your tower.
- Check the sale deed chain and an encumbrance certificate with your lawyer.
- Inspect the flat for damp, cracks, fittings and water pressure.
- Confirm the association's dues and maintenance charges in writing.
Under construction
- Verify the RERA registration and read the latest quarterly update.
- Read the possession date in the agreement for sale, not the brochure.
- Check the payment plan is linked to construction stages, not just dates.
- Look at the builder's earlier projects and how they were handed over.
Common mistakes
- Forgetting rent in the sum. Rent during construction is a real cost.
- Taking a tight possession date at face value. Plan for some delay in your rent budget.
- Calling a flat "ready" without an OC. Without it, GST may still apply and the bank may hesitate.
- Skipping inspection of a ready home. Under a RERA-registered project, section 14(3) gives five years from handover to report defects, but you still want to spot problems before you pay.
Your decision checklist
- How soon must you move?
- Can you carry rent and pre-EMI together?
- Total cost over three years, including GST, rent and interest.
- OC seen, or RERA registration and possession date verified.
- Emergency fund still in place after the down payment.
Three buyer stories (illustrative)
Anita, moving city in four months. She has no room to wait and cannot carry rent and pre-EMI together. A ready-to-move home with an OC suits her, provided the papers and inspection are clean.
Kiran and Meera, renting comfortably. Their lease is stable, they have savings growing each year, and they would like to pick a floor and plan. An under-construction home in a RERA-registered project, with a builder whose past projects they can visit, may suit them, as long as their budget allows for some delay.
Sameer, unsure. He runs both sums for three years, including rent, GST, pre-EMI and EMI, and looks at how much loan he would have repaid in each case. The numbers, not the brochure, make the choice.
The bottom line
Ready homes trade a higher upfront cost for certainty and speed. Under-construction homes trade waiting and some risk for time and staged payments. Neither is right for everyone. Write your own numbers down, check the papers that matter for each route, and choose the one that keeps your monthly budget comfortable.
A short glossary
- Occupancy Certificate (OC): the authority's confirmation that the building was built as approved and can be lived in.
- Pre-EMI: interest-only payments on the part of the loan released during construction.
- Construction-linked plan: a payment schedule tied to stages such as foundation, slabs and finishing.
- Agreement for sale: the contract that fixes your flat, price, payment plan and possession date.
- Section 18 interest: the interest RERA lets you claim for each month a possession date is missed.
- Section 14(3): the RERA rule giving five years from handover to report defects.
Before you sign either way
Whichever route you choose, read the agreement for sale in full before paying more than the booking amount. Check the flat number, carpet area, total price and what it includes, the payment schedule, the possession date and the penalty terms on both sides. Ask a property lawyer to read it with you. One careful reading now costs far less than a dispute later, and it is the document that will protect you if anything goes wrong.