Union Budget 2025: Real Estate Sector Aims for Enhanced Monetary Limits and Incentives
The real estate sector is urging the government to reinstate tax deductions for affordable housing projects and increase the monetary limit for such projects. Grant Thornton Bharat, in its pre-Budget 2025 survey, highlights key areas for improvement to bo
Real EstateAffordable HousingUnion Budget 2025Tax DeductionsGstReal Estate MaharashtraJan 29, 2025
According to a pre-Budget 2025 survey conducted by Grant Thornton Bharat, the sector is pushing for several key adjustments, including raising the monetary limit for affordable housing, reinstating tax deductions, and rationalizing input credits under GST.
Key Demands of the Real Estate Sector
Increase in Monetary Cap for Affordable HousingOne of the primary demands is to raise the monetary cap for affordable housing from the current ₹45 lakh to ₹75-100 lakh.
This adjustment is crucial given the rising construction costs and inflation.
By increasing the cap, the government can help more middle-income families access affordable homes.
Reinstating Tax Deductions for Affordable HousingThe sector is also seeking the reinstatement of tax deductions for affordable housing projects.
Reviving these tax breaks could incentivize developers to focus on this segment, which is essential for achieving the government's ambitious 'Housing for All' mission.
Tax incentives can make it more attractive for developers to invest in affordable housing, ultimately leading to more options for buyers.
Rationalizing Input Credits under GSTSimplifying GST laws and rationalizing input credits for developers is another key demand.
This would reduce project costs, improve working capital efficiency for developers, and potentially lower property prices for consumers.
Streamlining the tax process can significantly boost the sector's competitiveness and attract more investment.
Increasing Housing Loan Deduction LimitThe real estate sector is advocating for an increase in the tax deduction limit on home loan interest payments from the current ₹2 lakh to ₹5 lakh.
This change would make homeownership more affordable, particularly for middle-income groups.
Additionally, the deduction for the home loan principal should be placed outside the limited window of Section 80C to make it more attractive.
Introducing Tokenisation in Real EstateGrant Thornton Bharat suggests integrating the real estate sector with tokenisation using blockchain technology.
This innovation would require encouraging investment and developing clear regulations for tokenising real estate transactions and records.
Tokenisation can enhance transparency and efficiency in the sector, making it more attractive to investors.
Encouraging Rental HousingTo meet the growing demand for housing and address high ownership costs, the government should prioritize funding and incentives for rental housing development.
This will increase the availability of affordable rental options, benefit a broader segment of society, and encourage private sector investment in the rental market.
Industry Status for the Real Estate SectorThe sector has been seeking 'industry' status for the last two budget sessions and is prioritizing it again this year.
Granting industry status to the housing sector would improve access to cost-effective funding and attract more investments, particularly for affordable housing projects.
This would stimulate construction activities, generate employment, and contribute to economic growth.
Expert InsightsAccording to Shabala Shinde, Partner and Real Estate Industry Leader at Grant Thornton Bharat, the Union Budget 2025 comes at a pivotal time for the real estate sector.
Simplifying GST on under-construction properties, rationalizing stamp duties, and enhancing tax incentives for affordable housing are essential to boost demand.
Encouraging rental housing, REITs, and FDI can improve liquidity and catalyze investments.
Strengthening urban infrastructure, smart cities, and digitized land records will enhance transparency and operational efficiency.
Promoting ESG policies and sustainable construction will align the sector with global standards.
Shinde emphasized that the budget must address these challenges to unlock housing accessibility, support long-term growth, and leverage real estate's potential to drive India's economy in a complex macroeconomic landscape.
ConclusionThe real estate sector's wishlist for the Union Budget 2025 includes a range of measures to make housing more affordable, reduce project costs, and attract more investment.
By addressing these key areas, the government can support the sector in achieving its goals and contributing to the overall economic growth of the country.
Frequently Asked Questions
What is the current monetary limit for affordable housing?
The current monetary limit for affordable housing is ₹45 lakh. The real estate sector is seeking to increase this limit to ₹75-100 lakh.
Why is the real estate sector seeking the reinstatement of tax deductions for affordable housing projects?
Reinstating tax deductions for affordable housing projects can incentivize developers to invest in this segment, which is crucial for achieving the 'Housing for All' mission.
How can rationalizing input credits under GST benefit the real estate sector?
Rationalizing input credits under GST can reduce project costs, improve working capital efficiency for developers, and potentially lower property prices for consumers.
What is the proposed increase in the tax deduction limit on home loan interest payments?
The real estate sector is advocating for an increase in the tax deduction limit on home loan interest payments from the current ₹2 lakh to ₹5 lakh.
Why is the real estate sector seeking 'industry' status?
Granting industry status to the real estate sector would improve access to cost-effective funding, attract more investments, particularly for affordable housing projects, and contribute to economic growth.
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