The 10-second answer
- Pick Ready-to-Move if you need a home now, want zero construction risk, immediate rental income/tax benefits, and no GST (provided the project has an occupancy/completion certificate). Razorpay
- Pick Under-Construction if you can wait 18–36 months, want lower entry prices and staged payments, and are comfortable with some execution risk in exchange for potential price appreciation during construction.
What changes the math (with facts you can verify)
Taxes & GST you actually pay
- RTM: No GST if the building has a valid completion/occupancy certificate (OC/CC). That’s why many end-users prefer RTM; it wipes out a 1–5% levy most buyers forget to budget for.
- UC: GST applies to buyer payments made before OC, 1% for affordable housing (as defined by the GST Council) and 5% for other residential, both without input tax credit (ITC) since April 2019. Goods and Services Tax Council+1
Income-tax timing
- RTM: Interest/principal deductions (Section 24(b)/80C under the old regime) start as soon as EMIs start on a completed home.
- UC: “Pre-construction” interest can be claimed only after possession, spread over 5 equal years; under the new tax regime, some deductions don’t apply for self-occupied property. Plan cash flows accordingly. India+2Income Tax India+2
Construction-delay risk (and why it still matters)
India tightened norms via RERA:
developers must park 70% of buyer collections in a separate account to
be used for land and construction only; this has reduced but not eliminated
delays. UP RERA+1
Academic and industry studies continue to flag finance and labour
bottlenecks as key delay drivers, i.e., risks haven’t vanished.
Price & payment dynamics
- RTM usually commands a premium (you’re paying for certainty, livability, and immediate use).
- UC often launches cheaper than comparable RTM in the same micro-market and lets you pay in construction-linked tranches, easing the upfront load. Potential price gains can accrue between launch and possession in rising markets.
Immediate use vs “double outgo”
- RTM: You can move in or rent out right away, no period of paying rent plus pre-EMI simultaneously.
- UC: Budget for 12–24 months (or more) of rent + pre-EMI overlap and the possibility that possession slips; this is where most first-time buyers feel the pinch.
A simple decision framework (use this like a checklist)
Your timeline
- Need keys in ≤ 6 months → RTM wins.
- Comfortable waiting 18–36 months → UC can work if risks are managed.
Cash-flow comfort
- Lump-sum heavy (down payment + near-full loan disbursal) is okay → RTM.
- Prefer staggered payments to match savings/bonuses → UC.
Tax & running yield
- Want immediate tax deductions and/or rental income now → RTM.
- Okay to defer tax benefits to possession; prioritise lower entry price → UC.
Risk tolerance
- Low (avoid delay, spec quality risk) → RTM.
- Moderate (accept managed execution risk for potential appreciation) → UC.
Micro-market trend
- Tight, mature area with limited new supply → RTM often holds value and rents.
- Emerging corridor with infrastructure under build-out → UC can capture upside if the builder and approvals are strong.
How to de-risk an Under-Construction purchase (the playbook)
- RERA hygiene: Confirm the project is RERA-registered; check quarterly updates and that 70% funds are ringfenced in the RERA account. Review the sanctioned plan, construction milestones, and proposed possession date on the state RERA portal.
- Escrow discipline: Ask for proof of the separate account and last engineer/architect/CA certificates tied to withdrawals. (RERA requires certification for every drawdown.)
- Approvals & land title: Don’t rely on a sample flat. Demand copies of key approvals (layout, environment, fire NOC), title & encumbrance certificates.
- Contract clauses: Insist on delay compensation that mirrors RERA interest provisions, a clear defect-liability period, and a specific possession date with grace limited to operational delays (not financing).
- Bank due diligence signal: Prefer projects approved by multiple major lenders. It’s not a guarantee, but it’s an added screen.
- Cash-flow model: Factor GST (1%/5%) on installments, ongoing rent during construction, and a 3–6 month buffer for slippages. Goods and Services Tax Council
When Ready-to-Move is the better trade
Choose RTM if you:
- Want certainty: What you see is what you get (building quality, view, common areas).
- Plan to self-occupy soon or want rental yield immediately.
- Prefer no GST and immediate tax benefits under the old regime.
Watch-outs with RTM:
- Higher ticket size vs UC; older inventory may need refresh costs (kitchen/wardrobes).
- Check association dues and any pending litigations before closing.
When Under-Construction can beat RTM
Choose UC if you:
- Have 18–36 months and want a lower entry price with staggered payments.
- Believe the micro-market has upcoming infrastructure or demand catalysts.
- Are buying from a credible, well-capitalised developer with strong RERA compliance.
Watch-outs with UC:
- Delay risk still exists despite RERA; studies continue to cite finance/labour as primary causes. Build a buffer. ijmh.org
- Double outgo (rent + pre-EMI) until possession; GST adds 1–5% to cost. Razorpay
- Tax benefits on pre-construction interest arrive after possession in five equal instalments; under the new regime for self-occupied use, this may not be available, model both regimes. ClearTax+1
Two quick scenarios
Scenario 1: First-time end-user, moving within 6–9 months
- Go RTM. You avoid GST, avoid rent+pre-EMI overlap, start tax benefits immediately, and remove execution risk. Razorpay+1
Scenario 2: Investor with a 24–30 month horizon in an infra-improving corridor
- Go UC (with discipline). Lock a good floor/stack at a lower price, use a construction-linked plan, and target possession around infra completion. Only with strong RERA compliance and conservative buffers. UP RERA
Bottom line
- If your priority is certainty, speed, and cash-flow simplicity, Ready-to-Move wins.
- If your priority is entry price and potential upside, and you can manage risk, Under-Construction can outperform.
FAQ
Which is cheaper overall: RTM or UC?
RTM often has a higher sticker price but usually no GST and no double outgo (rent + pre-EMI). UC usually launches cheaper and lets you pay in stages, but add GST (1%/5%), rent + pre-EMI till possession, and a delay buffer. Your “all-in” can end up surprisingly close—run the full math.
How does GST work on homes?
- RTM (with OC/CC): Typically 0% GST.
- UC: 1% (affordable as per rules) or 5% (other residential), no input tax credit. GST applies to installments paid before the occupancy certificate.
What are OC/CC and why do they matter?
- CC (Completion Certificate): Confirms construction is completed per sanctioned plans.
- OC (Occupancy Certificate): Confirms the building is fit to live in.
For buyers, an OC/CC means no GST, easier financing, smoother registration—and proof you’re not buying into lingering approvals.
How do income-tax benefits differ between RTM and UC?
- RTM: Home-loan interest deduction (and principal under the old tax regime) can start right away.
- UC: “Pre-construction interest” is claimable only after possession in 5 equal annual parts. Under the new regime, many deductions don’t apply—model both regimes before deciding.
What is “double outgo,” and why does it hurt UC buyers?
Until you get keys, you may pay rent where you live plus pre-EMI on the new loan. Budget this overlap for 12–24 months (or longer if delayed). RTM avoids this.
How much should I assume for construction delays?
RERA reduced, not eliminated, delays. A conservative thumb rule: add 3–6 months buffer beyond the promised date (more for complex phases). Always check the project’s RERA page for milestones and history.
How do home-loan disbursals differ?
- RTM: Near-full disbursal at closing; EMIs start immediately (but you can move in or rent out).
- UC: Construction-linked disbursals; you usually pay pre-EMI (interest only) till possession, then full EMI.
Which is better for rental yield and liquidity?
- RTM: Immediate rent and clearer yield; usually easier to exit because the product is “see-and-use.”
- UC: Yield starts only after possession; resale before completion can be possible but depends on builder policies, demand, and assignment clauses.
What documents should I verify?
- RTM: OC/CC, registry/Conveyance, possession letter, society NOCs, latest tax/maintenance paid receipts, encumbrance check, and a snag list for defects.
- UC: RERA registration & quarterly updates, sanctioned plans, title/encumbrance, environment/fire/NOCs, builder-buyer agreement (delivery date, delay compensation, defect liability), payment schedule & GST.
How do I make a clean, apples-to-apples comparison?
Build a simple calculator with: Base price + GST (if UC) + stamp/registration + interiors + rent saved/paid + pre-EMI till possession + maintenance + expected appreciation + delay buffer. Compare net cost and net benefit over your holding horizon (e.g., 7–10 years). Quick rule:
- Need keys in ≤6–9 months, want certainty → RTM.
- Can wait 18–36 months, trust the builder, want staged payments and upside → UC.
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