Affordable Housing Definition in India May Change: CREDAI Seeks Removal of 45 Lakh Cap

India’s affordable housing definition could undergo a significant policy reset, with CREDAI saying it expects changes to the existing framework within the next six months and urging the government to remove the ₹45 lakh price ceiling for affordable housing.

CREDAI President Shekhar Patel said the developers’ body has proposed defining affordable housing primarily by carpet area rather than sale price.

Under the proposal reported by Moneycontrol, The Economic Times and Fortune India, an affordable home would be limited to:

• 60 sq m of carpet area in metropolitan cities
• 90 sq m of carpet area in other cities
• no fixed ₹45 lakh price ceiling

The government has not yet announced or notified such a change.

The six-month timeline is therefore a CREDAI expectation, not an official implementation date.

What is the current affordable housing definition in India?

There is no single affordable housing definition that applies uniformly across every Indian housing policy, tax rule and lending programme.

That distinction is important for anyone searching for the current affordable housing definition in India in 2026.

For GST purposes, the framework introduced in 2019 defines an affordable residential apartment as a house or flat with:

• carpet area of up to 60 sq m in specified metropolitan cities;
• carpet area of up to 90 sq m in non-metropolitan cities and towns; and
• value of up to ₹45 lakh.

Qualifying affordable residential apartments are subject to an effective 1% GST without input tax credit, under the applicable real-estate GST framework.

NITI Aayog has separately noted that India uses multiple definitions of affordable housing for different policy, programme and financial purposes.

Its own affordable-housing committee used a working definition of:

• up to 60 sq m and ₹60 lakh in metropolitan cities; and
• up to 90 sq m and ₹45 lakh in non-metropolitan areas.

The difference illustrates the central policy problem: a single national price ceiling may not reflect the economics of every Indian housing market.

What exactly is CREDAI proposing for affordable housing?

CREDAI wants the ₹45 lakh price cap to be removed and affordable housing to be classified primarily by the size of the home.

The proposal reported across multiple publications retains the familiar carpet-area limits of:

• 60 sq m in metros
• 90 sq m outside metros

but removes the sale-price test.

CREDAI argues that the ₹45 lakh cap has become increasingly difficult for developers to meet because of higher:

• land prices;
• construction costs;
• approval costs;
• financing costs; and
• taxes and statutory charges.

The developers’ body says affordable housing now represents only around 14% of residential sales.

That 14% figure is an industry-reported indicator. The current reports do not provide a sufficiently detailed common methodology, city universe or measurement period to treat it as a universal national affordable-housing market share.

Why is the ₹45 lakh affordable housing cap under pressure?

The ₹45 lakh ceiling became part of the GST affordable-housing framework in 2019.

Since then, residential prices and development costs have risen substantially in several major housing markets.

Vantage has previously tracked the move towards higher-ticket housing in “Homes priced at Rs 1.5 crore-Rs 3 crore emerge as key housing segment”.

That shift creates a practical problem for affordable housing developers.

A compact apartment that satisfies the 60 sq m carpet-area limit could still cost more than ₹45 lakh because the underlying land is expensive.

The same-size apartment can also have very different development economics in Mumbai, Bengaluru, Chennai, Delhi-NCR, Kolkata or a smaller Tier-II city.

This is why the debate is increasingly moving from “What should the national price cap be?” to “Should India have one national price cap at all?”

Would removing the ₹45 lakh cap make homes cheaper?

Not automatically.

Removing the price ceiling would primarily change which homes or projects can potentially qualify under an affordable-housing definition.

It would not, by itself:

• reduce land prices;
• reduce cement, steel or labour costs;
• lower home-loan interest rates;
• increase household income;
• reduce stamp duty;
• guarantee a lower selling price; or
• provide a buyer subsidy.

This is one of the most important distinctions for homebuyers.

Changing the definition of affordable housing is not the same as reducing the cost of housing.

The eventual impact will depend on which tax incentives, planning benefits, financing concessions or buyer subsidies are linked to the revised definition.

How would a new affordable housing definition affect homebuyers?

For homebuyers, a wider definition could mean that more projects are marketed or classified as affordable housing.

But actual affordability remains household-specific.

A homebuyer still has to consider:

• purchase price;
• household income;
• down payment;
• home-loan eligibility;
• EMI;
• interest rate;
• loan tenure;
• maintenance charges;
• stamp duty and registration;
• commuting costs; and
• eligibility for government assistance.

NITI Aayog notes that housing is commonly treated as affordable when housing-related expenditure remains within roughly 30-40% of household income.

This income-based concept is economically more meaningful than property size alone, but it is harder to administer because reliable city-level household-income data are limited.

How would the change affect real estate developers?

For developers, removing the ₹45 lakh cap could make it easier for smaller apartments in expensive urban locations to qualify as affordable housing.

However, the commercial benefit depends on what the government attaches to that classification.

A new definition would have much greater impact if it also affects:

• taxation;
• development rights;
• FAR or FSI;
• approval processes;
• project finance;
• land availability;
• interest subsidies;
• credit guarantees; or
• other affordable-housing incentives.

Without associated incentives, broadening the definition may change project classification more than project viability.

What does PMAY-U 2.0 currently offer homebuyers?

The ongoing Pradhan Mantri Awas Yojana-Urban 2.0, or PMAY-U 2.0, uses its own scheme-specific eligibility conditions.

The Union Cabinet approved PMAY-U 2.0 to support one crore urban poor and middle-class families over five years.

For scheme eligibility:

• EWS household income is up to ₹3 lakh a year
• LIG household income is above ₹3 lakh and up to ₹6 lakh
• MIG household income is above ₹6 lakh and up to ₹9 lakh

Families generally need to meet the scheme conditions, including not owning a pucca house anywhere in the country.

Under the Interest Subsidy Scheme, households with income up to ₹9 lakh can currently qualify subject to scheme conditions for:

• a home loan of up to ₹25 lakh;
• a property value of up to ₹35 lakh;
• a 4% interest subsidy on the first ₹8 lakh of the eligible loan; and
• maximum government interest subsidy of ₹1.80 lakh.

This is an important SEO and policy distinction:

The ₹45 lakh affordable-housing debate and the ₹35 lakh PMAY-U 2.0 Interest Subsidy Scheme property-value limit are not the same rule.

Changing one does not automatically change the other.

Will removal of the ₹45 lakh cap change GST on affordable housing?

Not automatically.

Under the GST framework introduced in 2019, qualifying affordable residential apartments were given an effective 1% GST rate without input tax credit.

The framework uses the 60 sq m / 90 sq m carpet-area limits and a ₹45 lakh value ceiling.

If the Union housing ministry eventually adopts a different affordable-housing definition, that would not by itself prove that the GST definition has also changed.

A GST change would require the relevant tax-policy decision and legal notification.

For buyers and developers, this means it is essential to distinguish between:

housing-policy classification

and

GST classification of an affordable residential apartment.

Until the government formally changes the GST rules, the existing tax framework should not be assumed to have changed.

RBI housing loan limits already vary by city size

India's banking system already demonstrates another way of handling differences in property prices.

The Reserve Bank of India’s Priority Sector Lending directions use population-linked housing thresholds.

For qualifying individual housing loans, the current limits include:

Centre population	Maximum eligible housing loan	Maximum cost of dwelling
50 lakh and above	₹50 lakh	₹63 lakh
10 lakh to below 50 lakh	₹45 lakh	₹57 lakh
Below 10 lakh	₹35 lakh	₹44 lakh

These are Priority Sector Lending classification limits, not a universal definition of affordable housing.

However, they show that Indian housing policy already recognises that the appropriate property-value threshold can differ according to the size of the urban market.

Could India move to city-specific affordable housing price limits?

That is one possible policy direction.

NITI Aayog has cautioned that a single uniform affordable-housing definition can be difficult to apply across India's diverse housing markets.

A future system could potentially use:

• carpet area;
• city category;
• property value;
• household income; or
• a combination of these indicators.

One approach would separate project eligibility from buyer eligibility.

For example, a project could qualify based on unit size, location and price, while subsidies could remain targeted according to household income.

Such a system would be more complicated than one ₹45 lakh ceiling, but it could potentially reflect actual affordability more accurately.

No such final framework has yet been announced.

Why affordable housing reform matters for India

The definition debate comes as India's longer-term housing requirement continues to grow.

Vantage previously reported CREDAI's estimate that India could require “15 crore more urban homes by 2047”.

NITI Aayog has also argued that affordable housing needs structural reforms covering land, finance, urban planning, rental housing, project approvals and private-sector participation.

Changing the ₹45 lakh ceiling could therefore become one part of a much wider housing-policy reset.

But simply increasing the number of homes that qualify for an affordable-housing label will not, by itself, solve affordability.

The real test is whether policy changes increase the number of households that can actually buy or rent suitable homes without taking on an unsustainable financial burden.

What happens next?

The next major milestone is an official government proposal, notification or consultation document.

Until that appears, the market should watch for clarity on:

1. whether the ₹45 lakh affordable housing cap will be removed or increased;
2. whether India will adopt city-specific affordable housing limits;
3. whether the 60 sq m and 90 sq m carpet-area criteria will remain;
4. whether household income will become more important;
5. whether PMAY-U 2.0 eligibility will change;
6. whether the 1% GST affordable housing framework will be amended;
7. whether developers receive new tax or financing incentives; and
8. how many additional homes would qualify under the revised definition.

For now, the policy change remains a proposal advocated by CREDAI rather than a notified government decision.

Frequently Asked Questions

Has the ₹45 lakh affordable housing cap been removed in India?

No. As of the reviewed evidence, the ₹45 lakh cap has not been officially removed. CREDAI has asked the government to remove it and says it expects affordable-housing policy changes within about six months, but no final government notification has been issued.

What is the affordable housing definition in India in 2026?

India does not have one universal definition for every purpose. For the existing GST affordable-residential-apartment framework, the widely used test is up to 60 sq m carpet area in specified metros, up to 90 sq m outside those metros, and value up to ₹45 lakh. PMAY-U 2.0, RBI lending rules and other programmes use separate eligibility criteria.

What change has CREDAI proposed for affordable housing?

CREDAI has proposed removing the ₹45 lakh price ceiling and defining affordable housing primarily by carpet area: up to 60 sq m in metros and 90 sq m in other cities, according to multiple current reports. This is an industry proposal, not a notified rule.

Who is eligible for PMAY-U 2.0?

PMAY-U 2.0 broadly covers eligible EWS, LIG and MIG urban households that meet scheme conditions, including the requirement relating to ownership of a pucca house. Income limits are currently up to ₹3 lakh for EWS, up to ₹6 lakh for LIG and up to ₹9 lakh for MIG, with eligibility varying across the scheme’s different verticals.

What is the PMAY-U 2.0 home-loan subsidy?

Under the Interest Subsidy Scheme, eligible households with annual income up to ₹9 lakh can qualify, subject to scheme conditions, for a 4% subsidy on the first ₹8 lakh of an eligible home loan, with a maximum government subsidy of ₹1.80 lakh. The current ISS framework specifies a loan value of up to ₹25 lakh and property value of up to ₹35 lakh.

What is the GST rate on affordable housing in India?

The applicable framework provides an effective 1% GST without input tax credit on qualifying under-construction affordable residential apartments. The affordable-apartment definition uses prescribed carpet-area limits and a ₹45 lakh value ceiling. A future change to housing policy would not automatically alter the GST rule.

Will removing the ₹45 lakh cap make affordable homes cheaper?

Not necessarily. Removing the cap could allow more homes to qualify under an affordable-housing classification, but it does not directly reduce land prices, construction costs, loan rates or household EMI burden. Actual buyer affordability will depend on prices, incomes, financing and any incentives attached to the new policy.

Sources

Click on article title to view article.

“Centre likely to revise affordable housing policy in six months, says CREDAI” published on 3 October 2026 in Moneycontrol

“CREDAI says unable to build affordable homes due to high input cost, taxes; seeks govt sops” published on 2 October 2026 in The Economic Times

“CREDAI seeks affordable housing definition based on size, not price; expects policy framework in six months” published on 2 October 2026 in Fortune India

“Credai stresses Bengal’s real estate potential, calls for affordable housing reform” published on 2 October 2026 in The Times of India

“A Comprehensive Framework to Promote Affordable Housing” published on 7 January 2026 in NITI Aayog

“Cabinet approves Pradhan Mantri Awas Yojana-Urban 2.0 Scheme” published on 9 August 2024 in Prime Minister of India

“Recommendations of the 33rd GST Council meeting” published on 24 February 2019 in Press Information Bureau

“Master Directions - Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025” published on 24 March 2025 in Reserve Bank of India

Related Vantage Coverage

Click on article title to view article.

“India May Need 15 Crore More Urban Homes by 2047: CREDAI” published on 22 August 2026 in Vantage-Radar

“Homes priced at Rs 1.5 crore-Rs 3 crore emerge as key housing segment” published on 17 August 2026 in Vantage-Radar

“Tamil Nadu unveils My Home scheme to build 1 lakh affordable houses” published on 10 August 2026 in Vantage-Radar

Evidence Caveats

The reported six-month policy timeline comes from CREDAI, not from a government notification.

CREDAI's proposal to remove the ₹45 lakh ceiling and retain 60 sq m / 90 sq m limits is consistently reported by Moneycontrol, The Economic Times, Fortune India and other current reports.

The Times of India separately reported a different CREDAI formulation involving a ₹90 lakh limit and larger area thresholds. The accessible evidence does not establish whether this was a separate proposal, a different stage of discussion or a reporting discrepancy. No disputed threshold is presented here as final government policy.

The ₹45 lakh, 60 sq m and 90 sq m criteria discussed under GST should not be confused with all PMAY-U 2.0 eligibility rules.

PMAY-U 2.0 has vertical-specific limits, including the current Interest Subsidy Scheme property-value ceiling of ₹35 lakh.

RBI's ₹63 lakh, ₹57 lakh and ₹44 lakh dwelling-cost thresholds apply to Priority Sector Lending classification and are not a universal affordable-housing definition.

Unavailable metrics include:

• exact Google monthly search volumes for the FAQ queries;
• Google keyword difficulty or CPC;
• number of projects that would become newly eligible;
• expected increase in affordable-housing supply;
• expected reduction in buyer prices;
• fiscal impact of wider eligibility;
• expected developer-margin impact; and
• a confirmed government implementation date.