Affordable Housing — Multiple Definitions
Different regulators define affordable housing differently in India:
| Authority | Definition |
|---|---|
| GST Council | Carpet area ≤60 sq m (metros) / ≤90 sq m (non-metros) AND value ≤₹45 lakh — attracts 1% GST |
| RBI (Priority Sector) | Home loans up to ₹35 lakh in metros / ₹25 lakh in non-metros where property value ≤₹45 lakh / ₹30 lakh |
| PMAY-U | Based on income category (EWS/LIG/MIG) — not just property value |
| Section 80EEA | Stamp duty value of property ≤₹45 lakh — for additional interest deduction |
PMAY — Pradhan Mantri Awas Yojana Benefits
| Category | Annual Income | Interest Subsidy | Carpet Area Limit | Max Subsidy Amount |
|---|---|---|---|---|
| EWS | Up to ₹3 lakh | 6.5% on ₹6 lakh loan | 30 sq m | ~₹2.67 lakh |
| LIG | ₹3–6 lakh | 6.5% on ₹6 lakh loan | 60 sq m | ~₹2.67 lakh |
| MIG-I | ₹6–12 lakh | 4% on ₹9 lakh loan | 120 sq m | ~₹2.35 lakh |
| MIG-II | ₹12–18 lakh | 3% on ₹12 lakh loan | 150 sq m | ~₹2.30 lakh |
*PMAY-U subsidy subject to scheme availability and eligibility. Check pmaymis.gov.in for current status.
Section 80EEA — extra tax benefit: First-time home buyers whose property's stamp duty value is ≤₹45 lakh can claim an additional ₹1.5 lakh interest deduction under Section 80EEA — over and above the ₹2 lakh under Section 24(b). Total deductible interest: ₹3.5 lakh per year for qualifying affordable housing buyers.
Related Terms
Frequently Asked Questions
Affordable housing refers to residential units within the financial reach of low and middle income groups. For GST purposes: carpet area ≤60 sq m in metros (≤90 sq m non-metros) and value ≤₹45 lakh — attracts 1% GST. For PMAY, it is defined by household income: EWS (up to ₹3L), LIG (₹3–6L), MIG-I (₹6–12L), MIG-II (₹12–18L).
PMAY (Pradhan Mantri Awas Yojana) provides interest subsidy on home loans: 6.5% subsidy on first ₹6 lakh loan for EWS/LIG (~₹2.67 lakh benefit), 4% on ₹9 lakh for MIG-I (~₹2.35 lakh), 3% on ₹12 lakh for MIG-II (~₹2.30 lakh). The subsidy is paid upfront as a principal reduction on the loan.
Section 80EEA provides an additional ₹1.5 lakh interest deduction for first-time home buyers whose property's stamp duty value is ₹45 lakh or less. This is over and above the ₹2 lakh deduction under Section 24(b). Total interest deductible for qualifying buyers: ₹3.5 lakh per year.
1% GST applies on under-construction affordable housing where carpet area is ≤60 sq m in metro cities (or ≤90 sq m in non-metros) AND the value is ≤₹45 lakh. Regular under-construction properties attract 5% GST. This 4% saving translates to approximately ₹1.8 lakh saving on a ₹45 lakh property.
Two conditions must both be met: (1) Carpet area ≤60 sq m (metro) or ≤90 sq m (non-metro), and (2) Property value ≤₹45 lakh. Check the RERA registration of the project for declared carpet area. Verify the sales price is within ₹45 lakh. For PMAY, additionally verify your household income falls within the category limits.