Buying commercial office space in Bengaluru costs meaningfully more than the headline price, and the tax treatment is different enough from a home purchase that carrying over your flat-buying instincts will cost you money. This breakdown covers what you actually pay — GST at 12% and the input tax credit that changes it, stamp duty, the carpet-area trap, CAM charges — using current Karnataka rates, with Arvind The Edge on Tumkur Road as the worked context.
Key takeaways
- Completed building with an occupancy certificate: no GST at all. Under construction: 12%, but a registered business can generally claim input tax credit.
- Statutory charges run about 7.6% — 5% stamp duty, 10% cess on the duty, 2% surcharge on the duty, 2% registration.
- Registration doubled from 1% to 2% in August 2025. Plenty of online calculators still show the old rate.
- Price per carpet foot, not per super built-up foot. Office efficiency commonly runs 65% to 80%, and that gap is enormous.
- Commercial loans carry higher rates and lower loan-to-value, and none of the Section 80C or 24(b) relief you get on a home.
The GST question comes first, not last
On a residential purchase GST is simple and unpleasant: 5% on under-construction property, no input tax credit, nothing on a completed home with an occupancy certificate. It is a straight cost.
Commercial is different in both directions. The rate is higher — 12% on under-construction commercial property. But a GST-registered business buying for business use can generally claim input tax credit on it, subject to the conditions applying at the time and to how the space is used. That means the 12% is not necessarily lost the way the 5% on a flat is.
And a completed commercial building holding an occupancy certificate sits outside GST altogether, exactly as a completed home does. Sale of a fully constructed building post-OC is outside the scope of GST under Schedule III of the CGST Act.
This makes the occupancy certificate the first document to ask for, not the last. On a Rs 2 crore purchase the difference between “OC in hand” and “still legally under construction” is Rs 24 lakh in GST. Partial OCs exist too, so check which floors are covered rather than accepting a yes.
The full stack, worked
Here is a Rs 2 crore commercial purchase at Karnataka rates as they stood in September 2026. The figure is a stated illustration, not any particular building’s price.
| Line | Rate | With an OC | Under construction |
|---|---|---|---|
| Agreed price | — | ₹2,00,00,000 | ₹2,00,00,000 |
| GST | Nil / 12% | ₹0 | ₹24,00,000 |
| Stamp duty | 5% | ₹10,00,000 | ₹10,00,000 |
| Cess | 10% of duty | ₹1,00,000 | ₹1,00,000 |
| Surcharge | 2% of duty | ₹20,000 | ₹20,000 |
| Registration | 2% | ₹4,00,000 | ₹4,00,000 |
| Total outlay | ₹2,15,20,000 | ₹2,39,20,000 |
About 7.6% on top with an occupancy certificate, or roughly 19.6% without one before any input tax credit is claimed. Even where the credit is available, it arrives later and against output tax — it is not a discount at the counter, and your cash flow has to carry the gap in the meantime.
The carpet area trap
This one costs buyers more than any tax line and almost nobody asks about it directly.
Commercial space is usually quoted on super built-up area, which includes your share of lobbies, lift cores, staircases, service ducts and common toilets. The proportion you can actually put a desk on is the carpet area, and the ratio between the two is the efficiency.
On Bengaluru offices, efficiency commonly lands somewhere between 65% and 80%. Take a 3,000 sq ft purchase. At 80% efficiency you get 2,400 sq ft of usable floor. At 65% you get 1,950. That is 450 square feet — a large meeting room and four workstations — for exactly the same money and the same headline rate.
Ask for carpet area in writing and divide your total cost by it. Comparing two buildings on price per super built-up foot is comparing nothing, because the two numbers can be measured differently. Price per carpet foot is the only figure that means the same thing in both buildings.
The costs that never appear in the brochure
Statutory charges are the visible part. These are the ones that quietly reshape the budget.
| Cost | What to expect |
|---|---|
| Fit-out | Substantial on a bare shell — flooring, partitions, HVAC distribution, electrical, furniture |
| Maintenance deposit | Usually a lump sum at handover, held against common area costs |
| CAM charge | Monthly, per square foot, forever. Ask what it is today, not at launch |
| Legal | Title, OC review, agreement vetting — do not economise here |
| Loan processing | Commercial rates, lower LTV, tighter tenure |
| Brokerage | Where applicable, on purchase and again on letting |
CAM deserves particular attention because it is permanent. A building with a serviced lobby, air conditioning, backup power, security and lifts has a genuine running cost, and it is recovered from you monthly per square foot. A cheap purchase with an expensive CAM is not a cheap purchase — over a fifteen-year hold the CAM can rival the difference in purchase price between two buildings.
Finance and tax, which work differently
Carrying home-loan assumptions into a commercial purchase is a common and expensive error.
Commercial loans price higher than home loans and typically fund a lower proportion of the value, so you need more equity up front. Tenures are usually shorter. And none of the personal tax relief attached to home loans applies: no Section 80C deduction on principal, no Section 24(b) deduction on interest against salary income.
On the income side, if you let the space, rent is taxed as income from house property with the standard 30% deduction available, and TDS applies on commercial rent above the prescribed threshold. Where the purchase is made by a business rather than an individual, the treatment differs again. This is exactly the point at which a conversation with your chartered accountant is worth more than any article, including this one.
Model the input tax credit for your specific business before you sign, not in the abstract. Whether you can actually claim it depends on your GST registration, how the space is used, and the conditions in force. Buyers have assumed the credit, priced it into their offer, and then discovered they could not take it.
A sensible order of questions
If you are looking at a commercial floor this week, ask these, in this order, and write down the answers.
- Is there an occupancy certificate, and which floors does it cover? This decides the GST and the legality of trading from the unit.
- What is the carpet area? In writing. Then compute your price per carpet square foot.
- What is the CAM charge per square foot today? Not at launch, and ask what it was last year.
- What is the sanctioned power load per unit, and does backup cover tenant load or only common areas? For a clinic, lab or restaurant this is decisive.
- What are the parking rights, and are they documented? Commercial parking allocation is frequently informal and frequently disputed later.
- What is the RERA registration, and does the promoter name match who is signing? Pull the certificate yourself.
Six questions. Most of them get answered in a single meeting, and the answers will tell you more than any amount of comparing headline rates across listings.
Frequently asked questions
What GST applies to commercial property in India?
Under-construction commercial property attracts 12%, and a GST-registered business buying for business use can generally claim input tax credit. A completed building holding an occupancy certificate is outside GST entirely.
What are stamp duty and registration charges in Karnataka?
Stamp duty is 5% above Rs 45 lakh, plus cess of 10% of the duty and a surcharge of 2% of the duty within urban limits. Registration is 2%, doubled from 1% in August 2025.
Can I claim input tax credit on a commercial purchase?
Generally yes for a GST-registered business using the space to make taxable supplies, subject to the conditions in force. It depends on facts specific to you, so model it with your chartered accountant before you price it into an offer.
What is a good efficiency ratio for an office?
Bengaluru offices commonly run 65% to 80% carpet to super built-up. Higher is better, and the difference on a 3,000 sq ft purchase is around 450 usable square feet for the same price.
Do commercial loans work like home loans?
No. They carry higher rates, lower loan-to-value and shorter tenures, and none of the Section 80C or Section 24(b) relief that applies to a home loan is available.
How is rental income from commercial property taxed?
As income from house property, with the standard 30% deduction available, and TDS applies on commercial rent above the prescribed threshold. Treatment differs where a business rather than an individual owns the asset.
Related reading
Want this costed for a specific floor?
Send us the building and the size you’re considering and we’ll work the full stack — GST position, statutory charges, carpet-adjusted rate and the CAM — so you’re comparing real numbers rather than headline ones.
2 Comments