'Govt takes 50% in taxes on property': Tata Realty CEO on why middle-class India can’t afford homes
Industry estimates confirm that, once land premiums, approvals, compliance, and infrastructure charges are added in, the government’s share can climb to 30–50% of project costs in urban markets.
- Sep 17, 2025,
- Updated Sep 17, 2025 9:27 AM IST
The biggest obstacle to affordable housing in India isn’t just developers or construction costs—it’s the government itself, says Sanjay Dutt, MD & CEO of Tata Realty. Speaking at the India Today South Conclave, he argued that nearly 50% of a property’s cost goes straight to government taxes and charges, leaving little room for affordability.
“Government only takes away nearly 50% through the taxes on the property. So they need to first fix that,” Dutt said, pointing to the many hidden levies stacked on top of GST.
While GST on under-construction affordable housing is just 1%, and 5% on other residential properties, that’s only the beginning. Buyers also pay stamp duty (5–8%), registration charges, municipal fees, development cesses, and premiums for extra floor area. Industry estimates confirm that, once land premiums, approvals, compliance, and infrastructure charges are added in, the government’s share can climb to 30–50% of project costs in urban markets.
Dutt also flagged land as a crippling factor, often accounting for 50–85% of project costs in metros. He said government bodies like the Railways, Defense, Port Trusts, and municipal corporations hold vast tracts of unused land that could be unlocked for housing. “They need to monetize and unlock those, make land cheaper for affordable housing, and then allow private developers to build under tax benefits,” he urged.
But high taxes and expensive land aren’t the only issues. Financing remains costly, and infrastructure often fails to keep pace. “What’s the point of going 50 km from the city and doing affordable homes when people can’t commute?” Dutt asked.
Despite tax benefits for developers, Dutt said the mismatch persists: capital remains expensive, land is scarce, and urban transport and roads are inadequate. The result is that affordable housing schemes stall or get pushed far from where people actually work.
With buyers shouldering nearly half their property cost in government-related fees and developers squeezed by high land and capital costs, Dutt’s message was blunt: until land is unlocked and taxes rationalized, affordable housing will remain out of reach.
The biggest obstacle to affordable housing in India isn’t just developers or construction costs—it’s the government itself, says Sanjay Dutt, MD & CEO of Tata Realty. Speaking at the India Today South Conclave, he argued that nearly 50% of a property’s cost goes straight to government taxes and charges, leaving little room for affordability.
“Government only takes away nearly 50% through the taxes on the property. So they need to first fix that,” Dutt said, pointing to the many hidden levies stacked on top of GST.
While GST on under-construction affordable housing is just 1%, and 5% on other residential properties, that’s only the beginning. Buyers also pay stamp duty (5–8%), registration charges, municipal fees, development cesses, and premiums for extra floor area. Industry estimates confirm that, once land premiums, approvals, compliance, and infrastructure charges are added in, the government’s share can climb to 30–50% of project costs in urban markets.
Dutt also flagged land as a crippling factor, often accounting for 50–85% of project costs in metros. He said government bodies like the Railways, Defense, Port Trusts, and municipal corporations hold vast tracts of unused land that could be unlocked for housing. “They need to monetize and unlock those, make land cheaper for affordable housing, and then allow private developers to build under tax benefits,” he urged.
But high taxes and expensive land aren’t the only issues. Financing remains costly, and infrastructure often fails to keep pace. “What’s the point of going 50 km from the city and doing affordable homes when people can’t commute?” Dutt asked.
Despite tax benefits for developers, Dutt said the mismatch persists: capital remains expensive, land is scarce, and urban transport and roads are inadequate. The result is that affordable housing schemes stall or get pushed far from where people actually work.
With buyers shouldering nearly half their property cost in government-related fees and developers squeezed by high land and capital costs, Dutt’s message was blunt: until land is unlocked and taxes rationalized, affordable housing will remain out of reach.