Credai urges govt not to impose GST on fees paid by builders for extra FSI

This can be in the form of premium FSI, ancillary FSI, or fungible FSI.

Realtors’ apex body Credai has urged the government not to impose GST on charges paid by realty firms to development authorities for availing additional FSI, saying this will hit housing demand.

Credai has written to the finance minister in this regard. "Credai has strongly urged the central government to reconsider the proposition of charging 18 percent GST on FSI/additional FSI (floor space index) charges paid to local authorities for real estate projects," the association said in a statement.

Credai said the move will have a substantial impact on project costs, further pushing housing prices up about 10 percent across various parts of the country. Credai President Boman Irani said, "FSI/additional FSI charges constitute a significant part of the project cost, and the proposal to impose 18 percent GST on such charges could prove to be counterproductive and act as a deterrent to housing supply and demand, owing to additional financial obligations and increasing housing prices as a direct consequence." He requested the government to keep FSI charges exempt from GST.

"Any retrospective or prospective charges could destabilise the financial foundations of numerous projects, hampering the ability to facilitate timely possession by developers," Irani said.

FSI charges are paid to a local municipal corporation or planning authority for the privilege of buying more than the basic FSI limit on a plot of land. This can be in the form of premium FSI, ancillary FSI, or fungible FSI. The FSI is a ratio of the maximum construction area allowed on a plot of land to the plot area. For example, a plot of 1,000 sq mtrs with 1.5 FSI means that a maximum of 1,500 sq metres of construction area will be allowed on the plot.