The Pune Metro chapter of the real estate body Credai stated that imposing Goods and Services Tax (GST) on floor space index (FSI) charges would lead to a 10% increase in housing prices, which would adversely affect demand.

FSI determines the maximum floor area that can be developed on a plot of land and regulates construction density in that area.

During a post-GST Council meeting conference, finance minister Nirmala Sitharaman clarified that no decision had been made regarding FSI charges. She explained that the council acknowledged that such a decision would affect municipal revenues, as FSI is set by municipalities, and it would also impact states because land is a state subject.

In a statement, Ranjit Naiknavare, the president of Pune Credai, urged the government to maintain the status quo and exclude FSI charges from taxability before the meeting concluded. He emphasized that the proposed move would directly impact the middle-class segment, which constitutes 70 per cent of homebuyers, by making affordable housing projects economically unfeasible due to rising land and raw material costs. The trade body also expressed concerns that the move would affect supply and raise economic and viability issues.