Union Budget 2025: Real Estate Industry Eyes Policy Reforms and Incentives
The Indian real estate sector, which saw a significant recovery in 2024, looks forward to crucial reforms in the Union Budget 2025-26 to address challenges and boost growth.
Real EstateBudget 2025Tax IncentivesInfrastructureAffordable HousingReal Estate NewsJan 27, 2025
As the Union Budget 2025-26 approaches, the sector is eagerly awaiting crucial reforms and policy boosts to address rising construction costs, affordability concerns, and long-pending incentives.
Finance Minister Nirmala Sitharaman is set to present the budget on February 1, 2025, and the industry has high hopes that it will include measures to sustain and enhance this growth.
Key Expectations from the Budget 2025
Reduction in GST on Cement
Industry stakeholders are calling for a reduction in the GST on cement and the allowance for input tax credits on under-construction properties.
These measures are expected to significantly reduce construction costs and improve affordability for both developers and buyers.
Higher Tax Exemptions for Homebuyers
To provide relief to middle-income homebuyers facing rising property prices in urban centers, the sector is pushing for a significant increase in the home loan tax exemption limit from the current ₹2 lakh to ₹5 lakh.
This would be a substantial boost for those looking to purchase homes.
Affordable Housing Reforms
Affordable housing sales have declined sharply from 38% in 2019 to 18% in 2024.
Experts suggest revising the definition of affordable housing to better align with the dynamics of metro cities.
A restructured size and price limit, along with the reintroduction of the Credit-Linked Subsidy Scheme (CLSS), could help revive this segment.
Infrastructure Status for Real Estate
Granting 'infrastructure' status to the real estate sector remains a top priority.
This move could streamline regulatory approvals, attract foreign investments, and improve financing options for developers, thereby boosting the overall growth of the sector.
Tax Benefits for REITs
Real Estate Investment Trusts (REITs) have gained significant traction, but stakeholders are urging the government to exempt dividend income from double taxation.
This would enhance liquidity and encourage more retail and institutional participation in REITs.
Ease of Doing Business and Sustainability
Simplifying regulations and implementing single-window clearance systems are high on the industry's agenda.
Additionally, incentives for green building initiatives would support long-term, eco-friendly urban development, aligning with global trends.
Coworking Sector Incentives
The coworking segment has shown substantial growth and is seeking competitive institutional financing and infrastructure development in non-metro cities.
Policy support and enhanced connectivity could unlock its full potential.
Industry Voices
- Mahindra Lifespace Developers emphasizes the need for affordability measures and increased infrastructure investments to unlock growth in smaller cities.
- Savills India highlights the importance of aligning tax reforms with inflationary pressures to stabilize the sector.
- Sterling Developers reiterates the need for interest subsidies for first-time homebuyers and tax reliefs to boost housing demand.
- 315Work Avenue stresses the importance of improving institutional financing and easing operational processes for coworking spaces.
The real estate sector remains optimistic that the Union Budget 2025 will address its pressing demands and set the stage for sustained growth.
From tax reforms to policy incentives, the upcoming budget has the potential to create a stronger and more inclusive real estate ecosystem in India.
Frequently Asked Questions
What are the main expectations from the Union Budget 2025 for the real estate sector?
The main expectations include a reduction in GST on cement, higher tax exemptions for homebuyers, affordable housing reforms, infrastructure status for real estate, tax benefits for REITs, and incentives for coworking spaces.
Why is the reduction in GST on cement important?
Reducing GST on cement and allowing input tax credits on under-construction properties would help lower construction costs and improve affordability for both developers and buyers.
What changes are being proposed for affordable housing?
The industry suggests revising the definition of affordable housing to better align with metro city dynamics and reintroducing the Credit-Linked Subsidy Scheme (CLSS) to boost sales.
How can infrastructure status benefit the real estate sector?
Granting infrastructure status to real estate could streamline regulatory approvals, attract foreign investments, and improve financing options for developers.
What are the key demands of the coworking segment?
The coworking segment is seeking competitive institutional financing, infrastructure development in non-metro cities, and policy support to enhance connectivity and operational processes.
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