Analysis of the Finance Bill 2025 and Its Impact on the Real Estate Sector
02 February 2025/Hyderabad, India – The Confederation of Real Estate Developers’ Associations of India (CREDAI) Hyderabad acknowledges the presentation of the Finance Bill 2025. The bill introduces several measures aimed at fiscal stability but falls shor
Real EstateFinance Bill 2025Economic GrowthTax IncentivesInfrastructureReal EstateFeb 02, 2025
While the government’s efforts to ensure fiscal stability are commendable, the bill has overlooked the significant contributions of the real estate sector to the Indian economy and employment.
The recently released Economic Survey 2024-25 highlights the real estate sector's importance, noting that it, along with financial and professional services, contributed nearly 45% to the total services GVA in the first half of FY25.
Moreover, real estate is one of the largest employment generators in the country, directly and indirectly supporting numerous ancillary industries.
Despite these contributions, the Finance Bill 2025 does not adequately address the sector's pressing needs.
Key Concerns and Policy Gaps
1.
Lack of Targeted Tax Incentives
- The retention of current income tax rates is appreciated, but the absence of specific tax incentives for real estate investment is disappointing.
Measures such as enhanced tax deductions on home loans and reduced GST on construction materials would have significantly boosted sectoral growth.
2.
Insufficient Infrastructure and Housing Support
- The allocation of ₹1 lakh crore for urban development is a step forward, but it remains insufficient to address the rising infrastructure demands of an urbanizing India.
The housing demand in India is projected to reach 93 million units by 2036, necessitating greater financial support and policy initiatives.
3.
Inadequate Funding for Stalled Projects
- The ₹15,000 crore allocation under SWAMIH Fund-2 for completing stalled housing projects is welcome, but concerns remain about whether this funding is sufficient to tackle the current backlog.
4.
Affordable Housing and Mortgage Reforms
- While the budget includes provisions to support affordable housing, CREDAI Hyderabad urges the government to introduce more comprehensive policies, including interest subvention schemes and relaxation of mortgage conditions, to make homeownership accessible to a larger population.
5.
Need for Greater Digital and Infrastructure Integration
- The expansion of the Gati Shakti portal for better urban planning is promising, but its effectiveness in streamlining approvals and project execution for real estate developers remains to be seen.
6.
Investment in Ancillary Industries
- The real estate sector directly impacts numerous ancillary industries, including cement, steel, and construction technology.
Policies that support these industries, such as production-linked incentives, can lead to a cascading positive impact on the economy.
7.
Second Property Investment Benefits
- The removal of notional rent on second properties is a positive step, but further incentives to encourage investments in rental housing and commercial properties are required to stimulate market demand.
Information
The Confederation of Real Estate Developers’ Associations of India (CREDAI) is a national apex body representing the interests of real estate developers across India.
It aims to promote the interests of its members and the real estate industry as a whole by engaging with the government and other stakeholders to develop policies and regulations that foster sustainable growth and development.
Conclusion
While the Finance Bill 2025 includes several positive measures, there is a clear need for more targeted support for the real estate sector.
By addressing the gaps identified by CREDAI Hyderabad, the government can unlock the full potential of the real estate sector, driving economic growth, job creation, and improved living standards for millions of Indians.
Frequently Asked Questions
What is the main concern of CREDAI Hyderabad regarding the Finance Bill 2025?
The main concern of CREDAI Hyderabad is the lack of specific tax incentives for real estate investment and insufficient infrastructure and housing support in the Finance Bill 2025.
How much has the real estate sector contributed to the services GVA in the first half of FY25?
The real estate sector, along with financial and professional services, has contributed nearly 45% to the total services GVA in the first half of FY25.
What is the projected housing demand in India by 2036?
The projected housing demand in India by 2036 is 93 million units.
What is the SWAMIH Fund-2 and its allocation in the Finance Bill 2025?
The SWAMIH Fund-2 is a fund allocated ₹15,000 crore in the Finance Bill 2025 for completing stalled housing projects.
What is the significance of the Gati Shakti portal in the context of real estate?
The Gati Shakti portal is significant for better urban planning and has the potential to streamline approvals and project execution for real estate developers.
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