Over 25,000 buildings in Mumbai Metropolitan Region eligible for redevelopment with ₹30,000 cr value: CREDAI-MCHI
Mumbai redevelopment update: Developers said GST issues must be resolved for city to unlock its full redevelopment potential and overcome viability challenges
Over 25,000 buildings across the Mumbai Metropolitan Region (MMR) are eligible for redevelopment, with the total estimated project value exceeding ₹30,000 crore, according to a statement issued by real estate developers’ apex body CREDAI-MCHI on May 8.
The organisation emphasized that unlocking Mumbai’s full redevelopment potential requires directly addressing viability issues. "Approval costs in Mumbai stand at ₹55,200 per square metre, significantly higher than ₹1,800 in Pune and ₹5,500 in Delhi. This highlights the disproportionately high development charges in the city," CREDAI-MCHI stated.
The apex body was reacting to Bombay High Court’s ruling that clarified that GST is not applicable where homeowners appoint a developer to carry out redevelopment work.
The legal representatives of CREDAI-MCHI also said that the court merely ruled that GST on development rights is not payable under the reverse charge mechanism—it did not abolish the tax altogether.
The legal representatives stated that developers remain exposed to legal and financial risk until the GST Council or a larger bench of the High Court gives a conclusive verdict.
What was the Bombay High Court order?
The Bombay High Court last month clarified that GST is not applicable to developers where homeowners appoint a developer to carry out redevelopment work, provided there is no sale or Transfer of Development Rights (TDR) or Floor Space Index (FSI).
The court quashed the tax demand, noting that the agreement was purely for construction and did not involve any transfer of TDR or FSI.
Harsh Shah, Partner, Economic Laws Practice (ELP)added, "The confusion around the GST treatment of development rights has resulted in a wave of litigations across the country—with cases pending in Bombay, Delhi, Gujarat, and Karnataka High Courts. The judgment by the Nagpur bench of the Bombay High Court has been misinterpreted in some quarters as a blanket exemption from GST, which is inaccurate."
“A clear and consistent interpretation of GST law, in line with the nature of redevelopment transactions, is essential to restore confidence in the sector,” Shah said.
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How is GST affecting the viability of redevelopment projects?
According to Rohit Jain, Deputy Managing Partner, Economic Laws Practice (ELP), "Developers today face up to four layers of GST—5% on sale to customers, 18% on transfer of development rights, 5% on units handed back to existing residents, and non-creditable GST on construction materials."
Jain said, "These cascading taxes severely impact margins and slow down redevelopment. It is important to clarify that despite recent high court rulings, GST is still applicable—either under forward or reverse charge mechanisms—and the confusion in interpretation must be addressed urgently.
"CREDAI-MCHI, along with several developers, has made detailed representations to the GST Council, and we hope for swift intervention to reclassify development rights as immovable property, which should not attract GST under prevailing laws," Jain said.
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"When you add layers of GST and regulatory ambiguity to that, projects simply do not take off. Solving these issues is not just about helping developers—it is about providing safer homes to thousands living in dilapidated buildings, improving urban infrastructure, and unlocking housing supply," said Sunny Bijlani, Joint Secretary, CREDAI-MCHI.
"Fixing GST interpretation and aligning taxation to ground realities can significantly accelerate redevelopment. These are low-hanging fruits with massive economic and social impact, and we urge decision-makers to act swiftly," Bijlani said.
The apex body concluded in the statement that the Bombay High Court judgment is expected to stimulate redevelopment in Mumbai,a city where vertical growth remains the most practical solution amid limited land availability and ageing infrastructure.
