🏠 The Push for GST Exemption on Affordable Housing
The Indian real estate sector has long sought tax relief to make housing more accessible, especially for middle and lower-income groups. One of the biggest demands ahead of Budget 2025 is eliminating or reducing GST on affordable housing.
Currently, the GST structure for under-construction properties is:
| Property Type | GST Rate | Input Tax Credit (ITC) |
|---|---|---|
| Under-Construction Homes | 5% | ❌ Not Allowed |
| Affordable Housing | 1% | ❌ Not Allowed |
📉 Developers argue that the lack of ITC leads to increased construction costs, which are ultimately passed on to buyers. Eliminating or reducing GST can significantly lower home prices, making property ownership more accessible.
🏗️ Why This Matters for Homebuyers & Developers
1️⃣ Lower Costs for Buyers
A GST exemption could reduce property prices by 5-10%, making homes more affordable for first-time buyers.
2️⃣ Higher Demand for Housing
Removing GST can increase demand, helping developers clear unsold inventory and encouraging new projects.
3️⃣ Growth in Urban Housing Projects
With rising urbanization, more budget-friendly housing could help bridge the supply-demand gap, especially in metro cities.
4️⃣ More Incentives for Developers
A GST cut could boost investment in affordable projects, leading to faster construction and more housing stock.
💰 The Need to Redefine ‘Affordable Housing’
The current definition of affordable housing is outdated. Right now, a home qualifies as “affordable” if:
✅ The price is under ₹45 lakh
✅ The carpet area is up to 60 sq. m in metro cities (or 90 sq. m in non-metros)
However, with rising property prices, a ₹45 lakh limit is too low in major cities like Mumbai, Bengaluru, and Delhi-NCR.
🏡 Industry experts suggest raising the cap to ₹60-65 lakh, so more properties qualify for the lower 1% GST rate.
📜 Case Laws & Precedents Supporting GST Reduction
Several past rulings indicate that reducing indirect taxes on housing can drive economic growth:
- Delhi HC (2023): Stressed that high taxes on housing contradict the goal of “Housing for All.”
- Maharashtra Real Estate Tribunal (2022): Pointed out that GST increases home costs, hurting affordability for middle-income buyers.
If Budget 2025 removes GST on affordable housing, it would align taxation with the government’s housing schemes like PMAY (Pradhan Mantri Awas Yojana).
🔮 What’s Next? Possible Budget 2025 Announcements
💡 Based on industry expectations, the government may:
✅ Remove GST on affordable housing to boost home sales
✅ Increase the affordable housing price cap to ₹60-65 lakh
✅ Allow Input Tax Credit (ITC) for builders to lower construction costs
✅ Increase home loan interest deduction from ₹2 lakh to ₹4 lakh for tax benefits
🚀 Final Thoughts: If Budget 2025 eliminates GST on affordable housing, it could reduce prices, increase demand, and make homeownership a reality for millions.