Sidhant Shekhar Jha
Real estate continues to be the backbone of India’s economic and social fabric, and recent legal developments have placed its taxation framework under renewed scrutiny. At a press conference held at CREDAI-MCHI’s New Marine Lines office, Sunny Bijlani, Joint Secretary of CREDAI-MCHI said, “Let me begin by highlighting a fact that affects each one of us: 85% of India’s savings are invested in real estate. This isn’t just a statistic — it underlines the foundational role real estate plays in our country’s economic landscape,” he said. Convened to discuss the impact of a recent Bombay High Court ruling on GST applicability in redevelopment projects, the briefing was attended by legal experts Rohit Jain and Harsh Shah from Economic Laws Practice (ELP.
“To help you grasp the magnitude of this sector, let me share a few important data points. Real estate is the second-largest employer in the country, right after agriculture. While discussions around job creation and ‘Make in India’ dominate the policy narrative, we must remember that our industry has been ‘making in India’ long before it became a slogan. Real estate is central to India’s economic engine — and it must remain at the forefront of national focus,” Bijlani emphasised.
He continued by drawing attention to the sector’s dynamic role in Maharashtra’s economy. “In just the last two years, real estate in Maharashtra alone has created over 3 crore new jobs. That’s a staggering contribution to employment,” he said. “Specifically, in Mumbai, we contribute significantly to the city’s infrastructure development. Each year, developers pay nearly Rs 5,000 crore to the municipal corporation — funds that directly support the infrastructure we all benefit from. It’s a contribution we take pride in, as we are fully aligned with the Hon’ble Prime Minister’s mission of ‘Housing for All’,” he added.
Bijlani then zeroed in on the issue of redevelopment, highlighting its unique role in Mumbai’s urban growth. “Over 50% of Mumbai’s population resides in slums. The only viable way forward for the city is redevelopment. Land availability is extremely limited, and hence, the entire Development Control Regulation (DCR) framework of Mumbai revolves around redevelopment. Every section, every clause in the DCR is built on the foundation of redevelopment, because that is Mumbai’s only path to growth.”
He further explained how redevelopment typically works. “Across India, the current model of real estate transactions has shifted. Direct land purchases are increasingly rare. Instead, projects are typically undertaken through joint development with landowners, where developers offer either a share of the revenue or built-up area. In Mumbai, this is widely seen in society redevelopment projects, which are growing in number each day,” he said.
On the subject of GST, Bijlani made the developer community’s stance clear. “To simplify a key issue: there are three primary aspects of GST that affect developers. Area Transfer to Landowners/Societies: When we construct and hand over built-up areas to society members or landlords, that transfer attracts GST. Development Rights: As developers, we pay GST on the rights we receive, usually at the time of project completion. Leasehold Land: Land acquired from authorities like MHADA, CIDCO, etc., on long-term lease is also subject to GST, as it is treated as a taxable supply.”
He highlighted the proactive approach CREDAI-MCHI has taken in engaging with the authorities. “We have made several representations to authorities at both the state and central levels, including to the commissioners of the State GST department. Our intent is simple: we want development to be viable. If it is viable for us, we can deliver affordable housing to the end customer, which is, after all, the ultimate goal.” He reiterated, “In Mumbai, there are over 15,000 dilapidated buildings. Redevelopment is the only way that their residents can be rehoused in safe, dignified homes. It’s been almost eight years since the implementation of GST, and it’s high time we addressed the gaps in the system. Our objective is to ensure that GST policies align with the broader mission of ‘Housing for All’ while making real estate development more feasible.”
As redevelopment continues to gain momentum across Maharashtra, industry experts and legal professionals are urging for greater clarity and consistency in the application of GST laws. With policy intent and legal interpretation currently at odds, stakeholders await a definitive resolution from the judiciary and the GST Council that can unlock the true potential of urban renewal projects.
