Budget 2025: Real Estate Industry Seeks Tax Incentives for Affordable Housing
Pramod Khairnar Patil, president of CREDAI Maharashtra, highlights the need to revive and extend Section 80-IBA benefits, which offer 100% tax exemption on profits from affordable housing projects.
Real EstateTax IncentivesAffordable HousingBudget 2025GstReal Estate MaharashtraJan 30, 2025
The real estate sector is urging the government to introduce a series of tax incentives and policy reforms to boost affordable housing and streamline real estate transactions.
Developers are pushing for the exemption of Goods and Services Tax (GST) on joint venture (JV) agreements to simplify transactions and reduce tax burdens.
Additionally, they are calling for a reduction in GST rates on key construction materials like steel and cement.
This would help lower input costs for developers, making housing more affordable.
Key demands also include raising the home loan tax deduction limit, reinstating input tax credits under GST, and extending tax holidays for affordable housing projects.
These measures are seen as essential to improve accessibility and affordability in the housing market.
Pramod Khairnar Patil, president of CREDAI Maharashtra, emphasized the need to revive and extend Section 80-IBA benefits, which offer a 100% tax exemption on profits from affordable housing projects.
“The government has not revised the price and size definitions of affordable housing to reflect current market dynamics.
We propose an enhancement to better reflect the current realities,” he said.
Patil also advocated for raising the tax deduction limit for housing loan interest under Section 24(b) from Rs 2 lakh to Rs 5 lakh, making homeownership more accessible.
He suggested allowing Foreign Direct Investment (FDI) in Limited Liability Partnerships (LLPs) to improve the ease of doing business in real estate.
Aashish Puravankara, managing director of Puravankara, echoed the demand for tax relief.
“A tax deduction of up to Rs 5 lakh on home loan principal and interest under Sections 80C and 24(b) would provide significant relief to homebuyers and boost housing demand.
Additionally, redefining affordable housing by raising the price cap from Rs 45 lakh to Rs 80 lakh would better reflect market realities,” he stated.
Puravankara also called for the reinstatement of the input tax credit (ITC) under the GST regime to support the sector.
Arun Shukla, president and director of JK Lakshmi Cement, stressed the need to reduce GST on cement from 28% to 18%.
“We urge the government to focus on expediting project approvals, releasing funds promptly, and introducing incentives for green manufacturing to enhance competitiveness,” he added.
Anshul Singhal, managing director of Welspun One, highlighted the importance of simplifying land acquisition and encouraging sustainability.
“Key interventions such as fostering green building incentives and reducing construction costs via innovative public-private partnerships can position India as a preferred investment destination,” he said.
Singhal also emphasized the role of Alternative Investment Funds (AIFs) in real estate financing and called for expanding tax benefits in this segment.
He suggested extending the scope of Section 72A of the Finance Act to classify real estate as a capital-intensive sector to attract more investment.
Rajat Kapur, managing director North India, UAE & KSA, of The Executive Centre, pointed out that simplifying processes for Global Capability Centres (GCCs) to set up offices in India would enhance the country’s position as a global business hub.
“Streamlining investment procedures and enhancing urban infrastructure will empower businesses to drive growth and innovation,” he said.
Deepak Patkar, CEO and MD of SMFG India Home Finance Co., stressed the need for increased liquidity and credit access for developers.
“Developers must be incentivized through supportive measures like easier credit access at competitive terms and faster land and allied approvals to ensure timely project completion,” he noted.
Nitesh Kumar, managing director and CEO of Emami Realty, pointed out that an increase in the price cap for affordable housing and extended home loan tax benefits would help improve accessibility and affordability.
Rakesh Reddy, director of Aparna Constructions, urged the government to introduce financial incentives for green and sustainable building practices.
“Tax rebates or grants for projects that prioritize renewable energy, water conservation, and energy efficiency would align the real estate sector with India’s commitment to climate goals,” he said.
Saurabh Runwal, director of Runwal Realty, called for liquidity-enhancing policy measures.
“This includes reducing long-term capital gains taxes, streamlining REIT regulations, and increasing interest rebates for housing loans.
With land costs making up 70-80% of expenses in major metros, these reforms will directly impact the affordability and scalability of residential projects,” he explained.
Shashank Paranjape, managing director of Paranjape Schemes Construction, highlighted the need for reforms in stamp duty and simplified GST regulations for under-construction properties to make transactions smoother and more cost-effective.
Ajay Agrawal, managing director of BramhaCorp, emphasized that industry stakeholders expect increased tax incentives for affordable housing, policies to simplify land acquisition, and measures to promote green building practices.
Abhishikta Munjal, chief risk officer of IIFL Home Finance, underscored the importance of extending the tax holiday for affordable housing projects under Section 80-IBA and granting broader infrastructure status to real estate to encourage large-scale development.
Frequently Asked Questions
What is the main demand from the real estate industry for Budget 2025?
The main demand is for increased tax incentives, particularly for affordable housing, and measures to streamline real estate transactions and reduce costs.
What are the key provisions of Section 80-IBA that the industry wants to revive?
Section 80-IBA offers a 100% tax exemption on profits from affordable housing projects. The industry wants this benefit to be revived and extended.
Why is there a call for reducing GST rates on construction materials?
Reducing GST rates on materials like steel and cement would lower input costs for developers, making housing more affordable.
What changes are proposed to the home loan tax deduction limit?
The industry is advocating for raising the tax deduction limit for housing loan interest under Section 24(b) from Rs 2 lakh to Rs 5 lakh.
How can green and sustainable building practices be encouraged?
The industry suggests introducing tax rebates or grants for projects that prioritize renewable energy, water conservation, and energy efficiency.
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