Realtors Push for Affordable Housing Redefinition and GST Reduction

CREDAI, the Confederation of Real Estate Developers’ Associations of India, has urged the government to introduce transformative tax reforms to boost demand for affordable and mid-income housing. At a press conference held during the organization’s 25th foundation day celebration, CREDAI proposed measures including a 100% deduction on home loan interest, revision of the affordable housing definition, and reduction in GST for under-construction properties.

Revisiting the Affordable Housing Cap

CREDAI President Boman Irani highlighted the outdated affordable housing cap of ₹45 lakh, which was set in 2017. Citing inflation and market dynamics, he advocated for increasing the threshold to ₹75-80 lakh.

“With inflation and rising property costs, the current cap no longer serves its purpose. Revising it upwards will not only reflect market realities but also extend tax benefits to a larger group of homebuyers,” Irani stated.

He also suggested an alternative approach, removing the price cap entirely and using only carpet area—60 square meters for metros and 90 square meters for non-metros—as the defining criterion for affordable housing.

GST Relief to Benefit Homebuyers

CREDAI emphasized the need to reduce GST on under-construction homes. Currently, affordable homes priced up to ₹45 lakh attract 1% GST, while properties above this cap are taxed at 5%, with no input tax credit for developers.

Irani proposed extending the 1% GST rate to properties costing up to ₹75-80 lakh. “This revision will not only lower costs for homebuyers but also stimulate demand in the mid-income housing segment,” he noted.

Demand for 100% Home Loan Interest Deduction

The real estate body called for a complete waiver of the ₹2 lakh limit on home loan interest deductions under Section 24 of the Income Tax Act.

CREDAI President-Elect Shekhar Patel said, “A 100% deduction will put more disposable income in the hands of homebuyers, encouraging them to invest in housing.”

Irani echoed this sentiment, asserting that such a move would lead to a significant surge in demand, benefiting both buyers and developers.

Ease of Doing Business for Developers

CREDAI Chairman Manoj Gaur emphasized the challenges developers face in obtaining government approvals, which often take 12-18 months. He urged the government to streamline processes to improve ease of doing business in the real estate sector.

“Delays in approvals increase project costs and timelines, which ultimately affect homebuyers. Simplifying these processes is critical for the industry’s growth,” Gaur remarked.

A Long Legacy of Advocacy

Founded in 1999, CREDAI represents over 13,000 real estate developers nationwide. The body has consistently advocated for policies that drive growth in the real estate sector while making housing more accessible for all.

With these demands, CREDAI seeks to foster a housing ecosystem that addresses the needs of an evolving market, ensuring affordability and growth hand in hand. Whether the government will heed these calls remains to be seen, but the proposed reforms could mark a significant turning point for India’s housing sector.