Credai Urges Union Budget 2026-27 for Tax Incentives and Higher Cap on Affordable Housing

Realtors body Credai on Friday appealed to the Centre to revise the ₹45 lakh price cap and provide tax incentives to developers for building affordable housing projects in the upcoming Union Budget 2026-27, while citing high demand for such units.

The industry body, which claims to represent over 15,000 developers, sought the cap to be revised to ₹90 lakh under the definition of affordable housing.

“We have been demanding a change in the definition of affordable housing. In our recommendations to both the Finance and Housing ministries, we have asked to extend the cap of classifying affordable housing from the current ₹45 lakh to ₹90 lakh,” Credai president elect G Ram Reddy told Business Standard.

The association’s national president Shekhar Patel said that the input cost has increased since 2017 when the ₹45 lakh cap was first introduced.

He claimed that consumers can benefit if the cap is enhanced, as the goods and services tax (GST) on under construction affordable homes is only one per cent.

To boost the supply of affordable housing, Reddy said that the GST paid by developers on work contracts should be reduced to 5 per cent from 18 per cent, as this would bring down the prices of apartments.

“The government should also consider providing some tax incentives such as income tax exemption on profits on sale of affordable housing units to real estate companies developing these projects,” Credai Secretary Gaurav Gupta added.

This comes even as affordable homes have been seeing a drop in demand as well as supply in Tier 1 markets such as Delhi NCR and Mumbai. The segment has lost market share to luxury houses priced over ₹1 crore, with developers preferring to premium projects.

“Developers are looking towards premium and luxury projects as there is strong demand for them,” a realty firm executive told Business Standard on the condition of anonymity.

According to a report by realty consultancy firm Anarock, affordable homes, priced under ₹45 lakh per unit saw a 26 per cent price rise over three years since 2022 versus 40 per cent returns from luxury homes priced ₹1.5 crore and above.