Budget 2025: Real estate sector seeks industry tag, single window clearance, tax rebate on housing loan interest

Anuj Puri, Chairman – ANAROCK Group said that amid declining real estate activity in the second half of CY 2024, the sector anticipates government measures to revive the overall consumption. “For the real estate sector, key expectations include industry status recognition and a revival of the affordable housing segment… Tax reliefs and other incentives are standard expectations of the sector from the budget,” he said.

Pradeep Aggarwal, founder and chairman of Signature Global (India) Limited, said that granting real estate sector an industry status will be a transformative step, which would have a multiplier effect on over 200 allied industries. “This recognition would not only stimulate job creation and skill development but also drive economic activity, reinforcing the sector’s critical role in India's economy,” he said.

Similar expectations echoed in the words of Sanchit Bhutani, managing director of realty firm Group 108. “The implementation of a single-window clearance system is equally critical, as it would save valuable time for developers and accelerate project delivery. We also seek measures to cap interest rates and ensure they remain conducive to sustained growth in the sector. We anticipate the Union Budget to include fiscal incentives to stimulate demand and supply. The budget could also introduce tax incentive under Section 80 C for REIT investors,” he said.

Tejas Patil, founder of Arbour Investments also said that industry status for real estate is a critical demand of realtors. This can streamline access to institutional finance, potentially reducing borrowing costs and enhancing transparency, he added.

Fiscal measures to boost the sector

The builders have also demanded a slew of fiscal measures to boost the sector. These include tax rebate on housing loan interest to be enhanced to a minimum of Rs 5 lakh, and GST input tax credit and introduction of tax incentive under Section 80C for REIT investors.

G Hari Babu, national president of NAREDCO, said that the Union Budget offers a critical opportunity to address key challenges and propel the real estate sector towards sustainable growth. “Increasing the income tax deduction limit on interest payments under Section 80C from Rs 2 lakh to Rs 5 lakh and easing the home loan interest rates will make homeownership more accessible. Buyers will benefit from measures like restoring the interest subvention under PMAY for loans up to Rs 6 lakh and offering a fixed interest rate of 5 percent for loans up to Rs 25 lakh,” he said.

He demanded that to further encourage investment, the Rs 10-crore cap on capital gains tax exemption should be lifted, and a uniform long-term capital gains tax across asset classes should be introduced.

Aggarwal, chairman of Signature Global, said that increasing the current tax exemption limit on housing loans to Rs 5 lakh, considering the rising property prices and construction costs, would provide a much-needed relief to homebuyers. This measure could empower aspiring homeowners and fuel demand across the sector.

“Strategic reforms, such as streamlining GST input tax credit rules, could alleviate developers’ tax burdens, helping stabilise property prices and making housing more accessible. Introducing a Rs 5 lakh subsidy for housing loans up to Rs 1 crore would also provide essential financial support to urban and semi-urban homebuyers,” Aggarwal said.

Ankush Kaul, president of sales, marketing and CRM at Central Park, said that key initiatives, such as a reduction in home loan interest rates and increased tax deductions on loan repayments, will stimulate demand across all segments and provide a significant boost to the housing market.

Abhishek Tharwani, Director, Mumbai-based Tharwani Realty, said that initiatives like reduced GST on construction materials, streamlined approval processes, and tax benefits for affordable and mid-segment housing can significantly drive demand in Tier 2 and 3 cities.

Sandeep Agarwal, Executive Director, Finance & Group CFO, Elan Group, said that real estate sector is optimistic about the potential of Union budget to usher in transformative changes for the sector. "Strategic fiscal measures aimed at stimulating demand, easing liquidity constraints, and simplifying regulations are critical to revitalizing the market and ensuring sustainable growth," he said.

Peush Jain, MD of commercial leasing and advisory at Anarock Group, said that the Union Budget should also initiate reforms that will aid country’s attractiveness as an investment destination for both domestic and foreign companies. “Input tax credit on fit-outs, review of depreciation and amortisation rates for assets on the backdrop of larger adoption or AI and incentivising new technology sectors would fuel the office demand evenly across the country,” he said.