Union Budget 2026: Real Estate Sector Seeks Tax Relief and SWAMIH Fund Expansion
Ahead of the Union Budget, real estate stakeholders have called for tax reforms and greater government funding, particularly through the expansion of the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund.
Targeted fiscal measures are critical to sustaining housing demand, reviving stalled projects, and aligning policy with current market realities, industry leaders have said. Industry body the National Real Estate Development Council (NAREDCO) has stressed the need for deeper financial support to unlock real estate-led growth through schemes such as the SWAMIH Fund.
Industry stakeholders also highlighted the need to increase the home loan interest deduction limit from Rs 2 lakh to Rs 5 lakh. Additional interest subsidies and reduction in GST would provide a much-needed boost to affordable housing, they said.
SWAMIH Fund Expansion
Launched in 2019 with an initial corpus of Rs 25,000 crore, the SWAMIH Fund was created to provide last-mile financing to stalled residential projects and protect homebuyers stuck in delayed developments. Since inception, SWAMIH Fund-I has sanctioned investments in over 130 stalled projects across India, helping revive nearly one lakh housing units, according to government disclosures. Of these, tens of thousands of homes have already been completed and delivered in stressed markets such as NCR, Mumbai Metropolitan Region (MMR), and Pune.
“We urge the government to accord infrastructure status to the real estate sector, extend and expand the SWAMIH Fund, improve credit access for developers, rationalise GST on under-construction housing, and provide incentives for first-time homebuyers and rental housing,” NAREDCO president Parveen Jain said. He added that sustained investment in urban infrastructure and a sharper focus on tier 2 and 3 cities could significantly enhance demand, buyer confidence, and the sector’s contribution to GDP and employment.
Tax Reforms Key to Affordability and ‘Housing for All’
Tax policy reforms are another major expectation from the upcoming budget, especially as affordability pressures intensify in urban markets. Anita Basrur, Partner at Sudit K Parekh and Co. LLP, said the government’s “Housing for All” vision under schemes such as Pradhan Mantri Awas Yojana (PMAY) requires urgent recalibration of tax thresholds.
“With inflation, land prices, and construction costs rising, the current affordable housing cap of Rs 45 lakh and size limits of 60–90 square metres no longer reflect urban realities,” Basrur said. She called for reducing GST on housing projects, increasing the home loan interest deduction limit from Rs 2 lakh to Rs 5 lakh, and offering interest subsidies for first-time buyers.
Basrur also suggested enhancing capital gains reinvestment limits and streamlining approvals through a single-window clearance mechanism to boost the sector.
Policy Push
Developers, particularly in the premium and branded housing segments, are seeking consistency in taxation and improved access to institutional financing to sustain investor confidence. “The real estate sector eagerly anticipates policies that bolster long-term capital formation and reinforce housing’s pivotal role in economic growth,” said Anil Mittal, chief financial officer, Smartworld Developers.
Continued investment in urban infrastructure, mass mobility, and integrated city planning is critical, as improved connectivity and civic amenities directly enhance the appeal of residential developments. India Sotheby’s International Realty managing director Amit Goyal said for the housing momentum to sustain, buoyancy in the equity markets and foreign capital inflows must remain buoyant. “It is imperative for the budget to announce measures that will encourage more FDI (foreign direct investments) into the country,” he said.
