Real Estate Body Urges Government for Industry Status and Tax Benefits

The National Real Estate Development Council (NAREDCO) has urged the Indian government to grant industry status to the real estate sector and significantly increase tax deductions on home loan interest in the upcoming Union Budget. This move is aimed at reviving affordable housing and sustaining growth in the sector, according to the apex body.

Addressing a press conference on Thursday, NAREDCO Chairman Niranjan Hiranandani emphasized the need for equal importance to housing as any other infrastructure sector. He stated, “We need to ensure Housing For All. Housing should get equal importance like any other infrastructure sector.” Hiranandani also suggested that the government use its own land for developing affordable and mid-income housing projects.

A key demand from NAREDCO is a substantial hike in the income tax deduction limit on home loan interest for self-occupied properties. NAREDCO President Parveen Jain proposed increasing the current cap of Rs 2 lakh to Rs 5 lakh to improve housing affordability and stimulate demand. Jain also called for a revision in the definition of affordable housing, suggesting that homes priced up to Rs 75–80 lakh be classified as affordable, compared to the current ceiling of Rs 45 lakh.

Such a change, according to Jain, would significantly expand the eligible buyer base. He noted that GST on affordable homes is levied at just 1 per cent, making it more accessible for a broader range of buyers.

The association further pushed for policy support for rental housing, highlighting that low rental yields discourage private investment. Jain pointed out that rental returns in the housing segment are currently just 1–3 per cent, making rental projects financially unviable for developers. “To promote rental housing, the government must provide appropriate tax incentives and other facilities to real estate developers,” he said.

On the issue of industry status, Jain stated that the sector has been seeking this recognition for years. Granting industry status would enable access to cheaper institutional credit, including for land acquisition and construction inputs. Considering the real estate sector's role in employment generation and its contribution to the economy, he argued that it was time for policy parity. Jain added that the Indian real estate sector is estimated to grow to $1 trillion by 2030.

The demands put forth by NAREDCO reflect the broader challenges and opportunities in the real estate sector. By addressing these issues, the government can play a crucial role in ensuring sustainable growth and making housing more accessible to a wider population.