PUNE: Imposing Goods and Services Tax (GST) on floor space index (FSI) charges would increase housing prices by around 10%, adversely impacting demand, the Pune Metro chapter of real estate body Credai said on Saturday.
FSI determines the maximum permitted floor area that can be developed on a plot of land and controls construction density in that area.
In the post-GST Council meeting conference, finance minister Nirmala Sitharaman said that no decision on FSI charges was taken in the meeting. The council observed that the decision will impact revenues of municipalities since FSI is raised by them. It will also impact states as land is a state subject.
In a statement, Ranjit Naiknavare, Pune Credai president, urged govt to maintain status quo and keep FSI charges outside scope of taxability before the meeting concluded.
The move will directly impact the middle-class segment, which makes 70% of total homebuyers, by making affordable housing projects economically unviable with rising costs of land and raw materials. This would also affect supply, by raising economic and viability concerns, the trade body said.
