What India’s real estate sector hopes to see in Budget 2025

Hari 15-Dec-2024 12 comment

As the Union Budget 2025-26 approaches, scheduled for presentation on February 1, 2025, the Indian real estate sector has outlined several key expectations to bolster growth and enhance housing affordability:

1. Increase in Tax Exemption Limit on Housing Loans

Industry leaders advocate for raising the tax exemption limit on housing loan interest from the current ₹2 lakh to ₹5 lakh. This adjustment aims to provide significant relief to homebuyers, reflecting the rise in property prices and construction costs over time.

2. Granting Industry Status to Real Estate

The sector seeks formal recognition as an industry, which would facilitate easier access to financing and potentially lower borrowing costs. This status is anticipated to stimulate expansion, benefiting over 200 ancillary sectors, fostering job creation, skill advancement, and boosting overall economic activity.

3. Revision of GST Rates and Input Tax Credit Regulations

Developers are calling for harmonization of Goods and Services Tax (GST) rates across all types of real estate transactions and adjustments to input tax credit regulations. These reforms could alleviate the tax burden on developers, potentially leading to more moderate property prices.

4. Redefining Affordable Housing Criteria

There’s a push to expand the definition of affordable housing to include properties priced up to ₹1 crore, aligning with current market trends. Additionally, revising the GST concession limit for affordable housing from ₹45 lakh to ₹60-65 lakh is proposed to make homeownership more accessible.

5. Tax Incentives for Green Building Development

Experts recommend that the budget offer tax incentives and a simplified structure to promote the development of green buildings. This initiative would encourage sustainable construction practices within the industry.

6. Subsidies for Housing Loans

A proposal for a ₹5 lakh subsidy for housing loans up to ₹1 crore aims to provide financial assistance and incentivize homebuyers in semi-urban and urban areas. This measure is expected to further reinforce the government’s vision of ‘housing-for-all’.

The real estate sector is optimistic that these measures, if implemented, will enhance homebuyer confidence, stimulate demand, and contribute significantly to India’s economic growth.

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