Realty sector pleads for affordable housing cap revision to revive demand

Visakhapatnam: CREDAI Visakhapatnam president E Ashok Kumar has sought raising affordable housing cap from Rs45 lakh limit to Rs 80–90 lakh, GST cuts and stronger incentives to revive demand and restart stalled projects.

With Budget 2026 approaching, the real estate sector has urged the Centre to provide policy clarity to revive housing demand and help restart stalled projects.

Developers say rising land prices and construction costs, coupled with tax thresholds that have not kept pace with market conditions, have made several housing projects financially unviable, particularly in major urban centres.

Industry stakeholders have called for tax and GST policies to be aligned with current housing prices, along with targeted support for both homebuyers and developers.

A key demand is revising the affordable housing definition, particularly the current Rs45 lakh cap, which the sector argues no longer reflects actual project costs in many growth corridors.

Ashok Kumar said the present limit is outdated. He said the affordable housing ceiling and the associated 1 per cent GST benefit do not match prevailing land and construction costs in most development areas.

Kumar proposed increasing the affordable housing limit to Rs80–90 lakh and reducing GST on works contracts from 18 per cent to 12 per cent. He said these measures could improve project viability, help revive stuck developments and increase housing supply.

Developers also sought stronger incentives for first-time homebuyers, especially in the mid-income segment, which often falls outside affordable housing benefits. Kumar said a large number of buyers in this segment exceed the Rs45 lakh threshold and therefore do not qualify for the 1 per cent GST rate and related tax benefits.

Other demands include restoring the additional interest deduction under Section 80EEA and easing credit availability for developers. The sector believes these steps could help bring down housing costs and reduce EMIs.

Kumar also urged the government to treat housing as core infrastructure rather than an asset class, citing the needs of rapid urbanisation. While initiatives such as PMAY-Urban 2.0 reflect policy intent, he said further refinements are required to translate policy into housing supply, particularly in Tier 1.5 and Tier 2 cities.