As the Union Budget 2025-26 approaches, India’s real estate sector voices its expectations for critical reforms to address persistent challenges, spur growth, and make housing more accessible and sustainable. With the potential to significantly boost the nation’s GDP and socio-economic development, stakeholders emphasize the importance of progressive policy measures.
Key Industry Demands and Recommendations
1. Boosting Housing Affordability:
Increasing the income tax deduction limit under Section 24(b) from ₹2 lakh to ₹5 lakh for home loan interest payments and enhancing allocations for the Pradhan Mantri Awas Yojana-Urban (PMAY-U) are key demands. These steps can reduce financial burdens and encourage homeownership, particularly in affordable housing.
2. Granting Industry Status:
Formal recognition of real estate as an industry would enable easier access to institutional funding at lower interest rates, fostering growth in mid-segment and affordable housing projects.
3. GST Rationalization:
A uniform GST rate with input tax credit for residential and commercial projects, along with lower GST on under-construction properties, is expected to reduce overall costs and drive sales.
4. Incentives for Green Development:
Tax rebates for developers adopting eco-friendly technologies are sought to align with India’s sustainability goals and promote green real estate practices.
5. Infrastructure Development:
Enhanced investments in urban infrastructure, such as metro projects, highways, and smart cities, are crucial to creating new growth corridors and boosting real estate demand in emerging areas.
Voices from Industry Leaders
“NAREDCO commends the Finance Ministry for its efforts to address the real estate sector’s concerns. For Budget 2025-26, we recommend measures to stimulate growth and stability.
Firstly, the affordable housing segment, which is facing negative growth, needs increased funding for inclusivity and sustainable urban development. Raising the tax deduction limit on home loan interest payments from ₹2 lakh to ₹5 lakh can make homeownership more affordable and boost demand.
Granting infrastructure status to housing will unlock new investment avenues and establish housing as a critical part of national infrastructure. Additionally, improved urban infrastructure in energy and transportation is indispensable for sustainable growth and better quality of life. These measures will ensure the sector continues to drive India’s economic progress.”
“The real estate sector eagerly awaits reforms in the Union Budget 2025-26 to accelerate growth and enhance its role in India’s economic development.
Allowing home loan interest payments to be set off against income tax liabilities will ease financial burdens and stimulate demand. Reviving the 80-IB tax benefit for developers of affordable housing is essential for realizing the ‘Housing for All’ vision. Additionally, providing interest subsidies for affordable housing developers will lower project costs, enabling developers to pass on cost benefits to homebuyers. These measures can improve accessibility for middle-income and economically weaker sections while driving sector growth.”
Mr. Prashant Sharma, President, NAREDCO Maharashtra:
“Increasing budgetary allocations for affordable housing under PMAY-U and raising the home loan interest deduction limit from ₹2 lakh to ₹5 lakh are critical steps to boost affordability and homeownership. Additionally, granting industry status to the real estate sector is crucial. This will provide easier access to institutional funding at lower interest rates, especially for mid-segment and affordable housing projects, ensuring the sector’s sustained growth and contribution to the economy.”
Chintan Vasani, Founder Partner, Wise biz Developers
As the Union Budget approaches, it is essential to prioritize India’s housing and real estate sector, a key driver of economic growth. The government should enhance benefits for first-time homebuyers, making homeownership more accessible and boosting demand. Revisiting property tax provisions can ease financial pressures on homeowners and encourage real estate investments. Strengthening REIT regulations will attract institutional funding, bolstering the sector’s resilience. Additionally, advancing affordable housing initiatives is vital to ensure every Indian has the chance to own a home. These measures can create a thriving, inclusive housing ecosystem that supports individual aspirations while contributing to the nation’s economic progress.
