As we approach the Union Budget 2025-26, the real estate sector looks forward to policy initiatives and reforms that can drive growth, enhance affordability, and address long-standing industry challenges. The sector, a critical contributor to the nation’s GDP and a significant employment generator, requires sustained focus and support to maintain its upward trajectory.
- Boosting Housing Affordability: To ensure the success of initiatives like PMAY-U, it is imperative to increase budgetary allocations for affordable housing and expand credit-linked subsidies. Additionally, revising income tax deduction limits under Section 24(b) for home loan interest from ₹2 lakh to ₹5 lakh can further enhance housing affordability, encourage homeownership, and boost the flow of funds into the affordable housing sector, which has seen a slowdown in recent months.
- Industry Status for Real Estate: Granting industry status to the real estate sector remains a key demand. This will enable easier access to institutional funding at lower interest rates, particularly for mid-segment and affordable housing projects.
- Rationalization of GST: A uniform GST rate with input tax credit for residential and commercial projects can significantly reduce costs and streamline taxation. Additionally, reducing GST rates for under-construction properties can encourage buyers and increase project sales.
- Incentivizing Sustainable Development: The government should promote green and sustainable real estate practices through tax rebates and incentives for developers adopting eco-friendly building technologies and materials. This aligns with India’s commitment to achieving carbon neutrality.
- Focus on Infrastructure Development: Continued investments in urban infrastructure, including metro rail, highways, and smart cities, will boost real estate development in peripheral areas and unlock new growth corridors.
- Ease of Doing Business: A single-window clearance mechanism for approvals, reduced compliance burdens, and clear land title policies will streamline project execution and attract domestic and foreign investments.
- Support for REITs and Focus on Rental Housing: Encouraging investments in Real Estate Investment Trusts (REITs) through tax benefits and regulatory support can provide liquidity to the sector. Similarly, rental housing can play a pivotal role in addressing urban housing shortages and supporting the mobility of the workforce. The government should introduce incentives and policy support for developing affordable rental housing complexes, ensuring access to quality housing for tenants.
We are hopeful that the Union Budget 2025-26 will introduce measures that empower the real estate sector to thrive, creating opportunities for developers, homebuyers, and allied industries. By addressing these critical areas, the government can unlock the true potential of India’s real estate sector as a pillar of economic growth and development.
