India’s ₹45 Lakh Affordable Housing Limit May Change: What Homebuyers Need to Know About GST, Eligibility and the New Policy Debate

India | October 4, 2026
Estimated reading time: 8–10 minutes

India’s definition of an “affordable home” is facing one of its strongest challenges since the current ₹45 lakh price ceiling was introduced in 2019.

The Confederation of Real Estate Developers’ Associations of India, or CREDAI, is urging the Centre to remove the ₹45 lakh price cap and define affordable housing mainly by the size of the home.

CREDAI President Shekhar Patel said this week that the industry body is discussing the issue with government departments and hopes to see a revised policy framework over roughly the next six months. He argued that the current ₹45 lakh ceiling has become difficult to meet because land, construction, approvals and taxes have all become more expensive.

This is potentially important for millions of buyers because “affordable housing” is not merely a marketing label.

The classification can affect issues such as:

GST treatment on eligible under-construction homes;
government housing programmes;
developer economics;
the supply of smaller homes;
financing and policy incentives.

But one point needs to be made very clearly:

No new nationwide definition has been formally announced yet.

CREDAI is asking for a change and says discussions are underway. Buyers should not assume the ₹45 lakh rule has already disappeared.

Here is what the current rule says, why developers want it changed, and what a future revision could mean for homebuyers.

The Current Affordable Housing Rule

Under the GST framework introduced in 2019, an affordable residential apartment generally has to satisfy both a size test and a price test.

The current criteria are:

Location	Maximum carpet area	Maximum value
Metropolitan cities	60 sq m	₹45 lakh
Other cities/towns	90 sq m	₹45 lakh

The metropolitan-city category includes Bengaluru, Chennai, specified parts of Delhi-NCR, Hyderabad, Kolkata and the Mumbai Metropolitan Region.

The current GST framework gives qualifying affordable residential apartments an effective 1% GST rate without input tax credit, compared with 5% for other residential apartments covered by the newer regime.

That is why the ₹45 lakh threshold matters.

It is not just a number used in advertising.

It can affect the tax category of an under-construction home.

Why CREDAI Says ₹45 Lakh Is No Longer Realistic

The ₹45 lakh ceiling dates back to 2019.

A lot has changed since then.

Developers now face higher costs for:

land;
cement;
steel;
labour;
approvals;
finance;
infrastructure;
taxes.

CREDAI argues that these cost increases make it increasingly difficult to develop homes within the ₹45 lakh threshold in major urban markets.

At NATCON 2026 in Kolkata, the industry body said affordable housing supply has fallen sharply and that developers are struggling to launch enough homes that meet the current definition.

That problem is particularly obvious in expensive metropolitan markets.

Finding a new apartment in Hyderabad, Mumbai, Bengaluru, Delhi-NCR or Chennai that simultaneously satisfies:

location + acceptable size + current construction costs + ₹45 lakh maximum price

is becoming increasingly difficult.

CREDAI Wants Affordable Housing Defined by Size

The industry's core proposal is simple:

remove the fixed ₹45 lakh price ceiling and focus more heavily on carpet area.

CREDAI argues that a reasonably sized home remains an affordable-housing product even if inflation and land prices have pushed its selling price above the threshold set seven years earlier.

There is, however, an important detail.

Recent reports differ on the precise area limits being discussed.

Some reports say CREDAI wants the existing 60 sq m metro and 90 sq m non-metro size limits retained, while another reports that larger thresholds have also been discussed with policymakers.

Until the government publishes an actual proposal or notification, buyers should therefore treat the final size criteria as undecided.

The most consistent demand is the removal or revision of the ₹45 lakh price cap.

Has the Government Approved This Change?

No.

This is the most important fact in the story.

CREDAI says it is discussing a new affordable-housing policy with relevant government departments and expects movement over the next several months.

But that expectation comes from the industry body.

It is not the same as a final government notification.

A change affecting GST could also require involvement from the GST Council and related government bodies.

Until a formal rule is issued:

the existing affordable-housing definition continues to matter.

Why the ₹45 Lakh Limit Matters So Much to Buyers

Consider a new apartment marketed at:

₹44 lakh

and another at:

₹50 lakh.

Under the current GST definition, the ₹50 lakh home cannot qualify as an affordable residential apartment simply because its price exceeds the ₹45 lakh ceiling—even if the unit is relatively small.

That can make a meaningful difference when comparing under-construction homes.

The classification can affect applicable GST and the way developers structure projects.

But buyers should not assume that removing the ₹45 lakh cap would automatically mean every small ₹60 lakh or ₹80 lakh apartment suddenly attracts 1% GST.

That would depend on the final wording of any revised tax rules.

The industry proposal and the eventual government policy may not be identical.

What Does 1% GST on Affordable Housing Mean?

Under the current regime, qualifying affordable residential apartments attract an effective GST rate of 1% without input tax credit.

Other qualifying under-construction residential apartments generally attract 5% without input tax credit under the relevant post-2019 framework.

The distinction can be financially significant.

But GST is not normally charged in the same way on every residential purchase.

For example, where the entire consideration for a completed property is received after the completion certificate or first occupation, as applicable, the transaction is treated differently from a typical under-construction sale.

That is why buyers should always check:

whether the property is under construction;
whether a completion certificate has been issued;
what GST category the builder is applying;
what amount the tax is being calculated on.

Do not rely only on the phrase “GST included.”

Ask for the calculation.

The ₹45 Lakh Limit Can Be Misunderstood

A common mistake is to think:

“If the flat price shown in the advertisement is ₹44.9 lakh, it automatically qualifies.”

That may not always be the full calculation.

The GST Council's framework explains that the gross amount for this purpose can include more than the basic apartment price, including certain additional charges collected by the promoter.

So buyers should check the complete pricing sheet.

A brochure might show:

Base price: ₹44 lakh

but the final project charges can include:

parking;
development charges;
preferential-location charges;
common-facility charges.

The relevant tax treatment should be verified against the actual agreement and current rules.

Why Affordable Housing Supply Has Become a Problem

The debate is happening because India's housing market has changed significantly since 2019.

Premium and luxury housing have become much more prominent in major cities.

Developers often argue that higher-priced projects provide better margins than low-cost housing, particularly when land and financing costs are high.

CREDAI says affordable housing's share of residential sales has fallen dramatically compared with earlier years and that developers are finding it increasingly difficult to produce homes at the prices required by the existing framework.

That creates a serious policy problem.

The segment where housing need may be greatest can also be the segment developers find hardest to build profitably.

India’s Housing Construction Pipeline Is Already Huge

The affordable-housing debate comes as India's overall housing-construction market is expanding rapidly.

A new CREDAI-ANAROCK report released during the same NATCON conference says the value of residential projects under construction reached approximately $430 billion in 2025, up from about $235 billion in 2019.

Residential projects represented roughly 85% of the $503 billion total value of real estate under construction across housing, offices, retail and warehousing.

So India is not suffering from a lack of real-estate activity overall.

The bigger question is:

What type of housing is being built?

A construction boom dominated by expensive apartments does not necessarily solve the housing needs of middle- and lower-income households.

A ₹1 Trillion Real-Estate Market Does Not Automatically Mean Affordable Homes

CREDAI estimates India's overall real-estate sector has grown from roughly $120 billion in 2017 to around $600 billion today and could approach $1 trillion by 2030.

That growth brings:

construction jobs;
infrastructure investment;
housing supply;
commercial development.

But rapid industry growth can coexist with affordability problems.

If wages rise more slowly than:

land prices + construction costs + home prices + mortgage payments,

the average household can still find ownership increasingly difficult.

That is why the definition of affordable housing matters beyond the real-estate industry itself.

What Could Happen If the ₹45 Lakh Cap Is Removed?

There are several possible effects.

More Projects Could Qualify

Homes that are small enough to meet an area criterion but cost more than ₹45 lakh could potentially enter a revised affordable category.

That could make the category more realistic in expensive cities.

Developers Could Return to the Segment

If policy incentives become financially meaningful again, developers may find it more attractive to launch smaller apartments.

Buyers Could Get More Choice

Instead of choosing between a very small number of sub-₹45 lakh projects, buyers could potentially have more projects competing within an affordable-housing framework.

Government Revenue and Subsidies Could Be Affected

Broader eligibility can also increase the fiscal cost of tax concessions or incentives.

That is one reason policymakers need to balance affordability support with budget implications.

But Removing the Price Cap Has a Risk

There is another side to the debate.

Suppose affordable housing is defined only by size.

A small apartment in an extremely expensive neighbourhood could theoretically carry a very high selling price.

Should a compact ₹1 crore apartment automatically be called “affordable” simply because its carpet area is below a threshold?

That is the challenge policymakers must solve.

An effective definition needs to distinguish between:

small housing

and

genuinely affordable housing.

They are not always the same thing.

A Better Definition May Need to Consider Location

A fixed national ₹45 lakh cap creates obvious problems.

₹45 lakh buys very different housing in:

Mumbai;
Hyderabad;
Bengaluru;
Indore;
Nagpur;
Coimbatore;
a smaller Tier-3 city.

One possible policy approach would be to recognise these differences.

For example, affordability could theoretically take into account:

city category;
carpet area;
local property prices;
household income.

No final new model has been announced, but the current debate makes clear why one national price ceiling can become outdated over time.

“Affordable Housing” Does Not Have One Universal Definition

This is another point buyers should understand.

Different government programmes and regulators can use different affordable-housing criteria.

The current GST definition uses the familiar:

60 sq m / 90 sq m + ₹45 lakh framework.

But housing programmes can also classify households by income and use separate property or loan criteria.

A government review document for affordable housing notes that definitions differ across GST, PMAY-related frameworks, priority-sector lending and other policy systems.

So if one definition changes, it does not necessarily mean that:

every PMAY rule changes;
every bank loan rule changes;
every tax rule changes automatically.

Each scheme must be checked separately.

What About PMAY-U 2.0?

PMAY-U 2.0 continues as the Centre's major urban housing programme.

The mission supports eligible households through multiple verticals covering construction, purchase, rental housing and interest support.

Official guidelines identify eligible EWS, LIG and MIG households and apply scheme-specific conditions.

For example, the Affordable Housing in Partnership vertical supports qualifying EWS housing projects and uses its own project and dwelling-size requirements.

Therefore:

do not assume CREDAI's proposed affordable-housing definition automatically changes your PMAY-U eligibility.

Your eligibility depends on the specific scheme rules in force when you apply.

What Does This Mean for Hyderabad Buyers?

The issue is particularly relevant in Hyderabad.

Hyderabad is classified as a metropolitan city under the existing GST affordable-housing definition.

That means the current threshold generally requires:

up to 60 sq m carpet area

and

a value up to ₹45 lakh.

In many newer Hyderabad growth corridors, finding a newly constructed apartment satisfying both conditions has become difficult.

This is especially true in and around:

Gachibowli;
Financial District;
Kokapet;
Narsingi;
Tellapur;
Nallagandla.

Those markets increasingly contain mid-range, premium and luxury projects.

A revision to the national definition could therefore have real relevance for Hyderabad's smaller-unit market.

But until policy changes are officially notified, the current rules remain the safe basis for decisions.

Will Homes Become Cheaper If the Definition Changes?

Not necessarily.

This is important.

Changing the definition of affordable housing does not directly force developers to reduce selling prices.

A broader definition could:

improve tax treatment;
encourage supply;
change project economics.

More competition and more supply could eventually help buyers.

But final prices still depend on:

land cost;
construction cost;
demand;
location;
interest rates;
developer margins;
local approvals.

A policy change can improve affordability without causing a dramatic fall in sticker prices.

Could Developers Simply Raise Prices?

That is one concern whenever eligibility thresholds are loosened.

If demand rises because more projects receive favourable treatment, part of the benefit could theoretically be reflected in prices.

This is why policymakers must design incentives carefully.

Ideally, benefits should increase actual housing supply and buyer affordability rather than simply improve project margins.

Transparency around:

carpet area;
pricing;
GST;
charges;
subsidies

will remain important.

Buyers Should Compare Carpet Area, Not Just Super Built-Up Area

If future affordable-housing rules rely more heavily on size, carpet area becomes even more important.

Carpet area is not the same as:

saleable area;
super built-up area.

Two projects advertising a 1,000-sq-ft apartment may give the buyer different amounts of actual usable space.

When comparing apartments, ask for:

RERA carpet area

and compare:

final all-inclusive price ÷ carpet area.

That provides a more useful affordability comparison.

What Buyers Should Check Before Booking an “Affordable” Apartment

Do not rely on the project name.

A development called:

Affordable Homes

does not automatically satisfy a government definition.

Check the actual documents.

1. Carpet Area

Verify the RERA carpet area.

2. Total Price

Look beyond the base price.

3. GST

Ask which tax rate applies and why.

4. RERA Registration

Verify the project independently.

5. Completion Status

GST implications can differ between under-construction and completed homes.

6. PMAY Eligibility

Check separately through official programme rules if you expect a subsidy.

7. Additional Charges

Ask for a full cost sheet including parking, maintenance deposits and development charges.

Do Not Postpone a Home Purchase Based Only on This Proposal

Someone considering a home today may think:

“I should wait six months because the ₹45 lakh cap will definitely disappear.”

That would be speculative.

CREDAI hopes a revised framework will emerge within that period.

That is not a guarantee of:

timing;
final eligibility;
GST treatment;
size limits.

Property decisions should be based on rules that actually exist today.

If a future change improves your options, that can be reconsidered when the official notification is published.

Homebuyers Should Watch Three Government Decisions

If the affordable-housing definition is revised, three areas deserve close attention.

1. Price Cap

Will ₹45 lakh be removed, increased or replaced?

2. Carpet-Area Rules

Will the existing 60/90 sq m limits remain or change?

3. Tax Treatment

Will the 1% GST framework continue for newly eligible properties?

These three decisions will determine whether the reform creates a major change for buyers or only a technical reclassification.

Developers Will Watch GST Closely

For developers, the tax structure may be as important as the definition itself.

The existing affordable-housing category benefits from a lower effective GST rate on qualifying under-construction apartments.

A wider definition could make more projects eligible—but only if the related tax framework is revised accordingly.

That is why the debate involves more than the housing ministry.

CREDAI itself has acknowledged that multiple departments and the GST system are involved.

The final policy may therefore take time.

Why This Could Become One of India’s Biggest Housing Policy Stories of 2027

The issue touches almost every part of the housing ecosystem.

For buyers:

Can I afford a home?

For developers:

Can I profitably build smaller homes?

For government:

How much tax relief or subsidy is sustainable?

For cities:

Can enough housing be created near jobs and transport?

A simple ₹45 lakh number therefore has consequences far beyond its face value.

The final decision could influence what kinds of apartments developers launch over the next several years.

Frequently Asked Questions

What is the current affordable housing price limit in India?

Under the current GST framework, a qualifying affordable residential apartment generally cannot exceed ₹45 lakh, alongside applicable carpet-area limits.

What is the carpet-area limit in metro cities?

The current GST definition uses a maximum carpet area of 60 sq m in metropolitan cities.

What is the limit in non-metro cities?

The current maximum is 90 sq m under the GST affordable-housing definition.

Is Hyderabad considered a metropolitan city?

Yes. Hyderabad is included in the metro-city list used for this GST definition.

Is the ₹45 lakh affordable-housing cap being removed?

Not yet.

CREDAI has asked the government to remove the cap and says discussions are underway. No final nationwide replacement rule has been announced.

When could a new policy arrive?

CREDAI says it hopes for policy changes within roughly six months, but this is an industry expectation rather than a guaranteed government deadline.

What GST applies to affordable housing?

Qualifying affordable residential apartments under the post-2019 framework attract an effective 1% GST without input tax credit, subject to applicable conditions.

What GST applies to other residential apartments?

The corresponding rate under the newer regime is generally 5% without input tax credit for covered residential apartments outside the affordable category, subject to the relevant conditions.

Will removing the ₹45 lakh limit make my apartment eligible for 1% GST?

Not automatically.

That depends on the final policy and tax notifications. Buyers should wait for official rules.

Does affordable housing mean the same thing under PMAY-U?

Not always. Different housing programmes can use different income, property and project eligibility rules.

Should I delay buying a home until the new policy arrives?

Not solely because CREDAI expects a policy review. The timing and final structure have not yet been confirmed.

Final Takeaway

India's ₹45 lakh affordable-housing ceiling is becoming increasingly difficult to defend in markets where land and construction costs have risen sharply since 2019.

That does not mean the rule has already changed.

It has not.

The current development is that CREDAI is intensifying its push for a revised definition and says discussions with government are underway.

The industry's preferred direction is clear:

stop defining affordability primarily through a fixed seven-year-old price ceiling and give greater importance to the actual size of the home.

Whether the government agrees—and how it handles GST, PMAY and other housing programmes—will determine how significant the change becomes.

For buyers, the safest approach today is straightforward:

Use the current ₹45 lakh and carpet-area rules until an official notification says otherwise.

Check carpet area.

Check total price.

Check GST.

Check RERA.

Check subsidy eligibility separately.

And never assume an apartment qualifies for a government benefit merely because a developer calls it “affordable housing.”

If the policy is eventually rewritten, it could become one of the most important changes for India's middle-income housing market in years.

But the real test will not be what the new definition is called.

It will be whether it results in more homes that ordinary households can genuinely afford to buy.

Affordable Housing Rules India 2026: Will ₹45 Lakh Limit Change? GST & Eligibility Explained