Great Expectations

As the Union Budget 2025-26 is approaching, the real estate sector is pinning high hopes on steps that can act as growth catalysts and enhance operational efficiency.

Industry stakeholders anticipate increased tax incentives for affordable housing, policies to simplify land acquisition, and measures to promote green building practices, according to Ajay Agrawal, MD, BramhaCorp Ltd. Incentivising real estate investment trusts (REITs) could further boost commercial realty.

Also, with India’s urban population growing rapidly, the sector is seeking reforms and initiatives that can drive growth, address bottlenecks, and meet evolving market demands.

Revising the current tax exemption limit on housing loans to Rs 5 lakh, in line with rising property prices and construction costs, could provide significant relief to homebuyers, they anticipate.

Let’s look at the expectations the industry has from Union Budget 2025:

Grant Industry Status

According to the industry, granting industry status to real estate would be a great initiative, as the move is capable of invigorating over 200 allied industries such as cement, steel, hardware and electrical goods.

Securing industry status will unlock a plethora of legal and administrative benefits, along with much-needed tax incentives.

The developers feel, such recognition would foster job creation, enable skill development, and amplify economic activity, further solidifying the sector’s position as a cornerstone of India’s economy.

Introduce Single Window Clearance

A streamlined single-window clearance mechanism can drastically reduce approval timelines and operational costs, enabling developers to focus on delivering high-quality projects.

“Reforms in stamp duty, and simplified GST regulations for under-construction properties would be welcome changes, enabling us to deliver even greater value to our customers,” said Shashank Paranjape- MD, Paranjape Schemes Construction Ltd.

Revise Affordable Housing Criteria

Revising the affordable housing criteria would align with evolving market dynamics and strengthen the government’s vision of ‘housing-for-all’. These reforms, if implemented, could unlock tremendous potential, propelling the sector toward sustainable growth. The current definitions of affordable housing, based on size, price, and buyer income, require urgent revision.

While the size criterion (60 sq. m. carpet area) is reasonable, the price cap of Rs 45 lakh is unrealistic in Tier-I & Tier-II cities. The cap should be raised to at least Rs 60-65 lakh to reflect market realities.

Such revisions would enable more properties to qualify as affordable housing.

With appropriate boosters for affordable housing, FY 2025 could bring a revival, helping the residential segment regain its 2023 highs in sales and launches.

According to Prateek Mittal, Executive Director, Sushma Group, “The upcoming budget is an opportunity to redefine affordable housing in India. The government should consider extending the benefits under Section 80EEA to homebuyers and increase the limits for tax deductions on home loan interest.

Special scheme for Rental Housing

The government should come out with special scheme to promote rental housing. “A special tax dispensation may be considered to encourage organised development of rental housing, student housing, dormitories for industrial workers. Tax incentives will bring in much needed focus onto these segments and attract institutional capital enabling large scale development of alternate housing to address a growing need of the society,”said Routhu Nagaraju, Chief Executive Officer, Experion Developers.

Lower GST on under-construction properties

The developers are of the view that the industry requires a more robust and simplified tax regime to ensure ease of doing business.

“Lowering the GST on under-construction properties and removing ambiguity in stamp duty charges will enhance buyer confidence and improve transaction volumes,” said Mukul Bansal, Managing Director, Motiaz Group.

Additionally, the developers need strategic reforms for land acquisition and faster clearances to speed up project delivery timelines.

Strategic reforms, such as adjustments to GST input tax credit regulations, could reduce developers’ tax burdens, potentially stabilising property prices and making housing more accessible, developers are of the view.

Avinash Rao, Founder of Alt DRX, commented “High cost of material and construction can not be reduced or moderated immediately, but adjustments to input tax credit will reduce the cost burden on developers and subsequently pass it on to the home buyers.

Change of policies to attract domestic and international real estate funds will provide a big push for developers to raise capital and complete their projects on time.

Introduce Special Financial scheme

One of the biggest challenges that the sector faces is liquidity crunch and access to affordable financing.

“We hope the budget introduces special financing schemes or relaxes norms for REITs (Real Estate Investment Trusts) to attract more institutional funding,” said Piyush Kansal, Executive Director, Royale Estate Group.

Another key focus area should be incentivising commercial and mixed-use developments, which are pivotal to supporting the growth of IT hubs, startups, and co-working ecosystems in Tier-2 cities.

Tax Incentives for

Green Buildings

Developers are of the view that the commercial real estate sector anticipates measures to drive growth and innovation, with Grade A office spaces playing a crucial role in attracting global businesses, boosting economic progress, and establishing standards for sustainability and design.

Ashish Sharma, AVP Operations, Brahma Group said, “We encourage the government to consider policies such as tax incentives for green-certified commercial projects, easier access to financing, and streamlined regulatory approvals to accelerate developments. Additionally, enhancing infrastructure in key business districts and offering incentives for hybrid workspace solutions can further boost demand.”

Impetus on Infrastructure Investment

Focus on infrastructure investments in Tier-2 and Tier-3 cities will catalyse regional growth and provide a strong foundation for the real estate sector to flourish.

S.K Narvar, Group Chairman, Trident Realty, says, “As we approach the upcoming budget, the demand for premium residences remains robust, driven by evolving lifestyles and a desire for quality living. We also anticipate significant investments in infrastructure development, particularly in Tier-2 cities. This is crucial for unlocking the full potential of these markets. A supportive budget can catalyse this growth, fostering an environment where luxury housing thrives and infrastructure projects flourish. Together, these will not only elevate the real estate landscape, but also contribute to overall economic development of our nation.”

Revive Affordable Housing

• According to Anuj Puri, Chairman, Anarock Group, once a promising sector, affordable housing — homes priced under Rs 40 lakh — has struggled post-pandemic, with demand and supply shrinking significantly.
• According to Anarock data, the sales share of affordable housing fell to a mere 18 per cent in 2024 from over 38 per cent in 2019.
• Affordable housing requires focused attention and targeted benefits, which have been lacking in the past two years.
• Tax breaks to boost supply and enable buyers are crucial, but the challenges go deeper.
• A critical issue remains the lack of urban land, particularly in areas where affordable housing is most needed.
• To address this, the government could release centrally controlled land—managed by agencies like the Indian Railways, Port Trusts, and the Department of Heavy Industries — for affordable housing projects.