Real estate developers have their own wish lists for Union finance minister Nirmala Sitharaman ahead of the upcoming budget. From demand for industry status for the sector to a special push for affordable housing, the list is not short.
Builders also want some fiscal measures such as tax rebate on housing loan interest to be enhanced to a minimum of Rs 5 lakh, input tax credit under the goods and services tax and introduction of tax incentive under Section 80C of the Income-tax Act for investors in real estate investment trusts (REITs).
Here are five key things the real estate sector hopes to see when Sitharaman presents the budget on February 1.
Industry status and single-window clearance
Industry status for the real estate sector and single-window clearance have been the key demands of the sector for a long time. The move will help builders to secure easy loans and avail other benefits being granted to other industries.
Pradeep Aggarwal, founder and chairman of Signature Global (India) Limited, said that granting the real estate sector 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.
Pavan Kumar, founder and CEO, White Lotus Group, said that simplifying approval processes through single-window systems and facilitating access to affordable financing can enhance efficiency and enable the timely completion of housing projects.
Experts said that the industry tag to the real estate sector will streamline access to institutional finance, potentially reducing borrowing costs and enhancing transparency.
Boost for affordable housing
Once a promising sector, affordable housing—with homes priced under Rs 40 lakh—has struggled post-pandemic, with demand and supply decreasing significantly. The real estate sector is expecting major policy reforms to boost this shrinking segment.
Experts say initiatives such as the credit-linked subsidy scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY) and tax incentives for developers can help boost the segment at large. Realtors also urged the central government to change the definition of what qualifies as affordable housing.
“CREDAI (the Confederation of Real Estate Developers' Associations of India) recommends delinking unit prices from the carpet area definition and suggests updating the thresholds to 70 square metres for metro cities and 90 square metres for tier 1 cities. These adjustments aim to incentivise developers to focus on affordable housing projects while making homeownership more accessible to a broader range of income groups,” said Boman Irani, president of the industry body.
Also read: Will Union Budget 2025 revive India's affordable housing segment?
G Hari Babu, national president, National Real Estate Development Council (NAREDCO), said that revising the affordable housing price cap, which has remained unchanged for a decade at Rs 45 lakh, to Rs 60 lakh is imperative to account for rising input costs and inflation.
Ajjay Parge, founder, Qubit India, said that the affordable housing segment, which dropped from a share of 26 percent of the total market in 2021 to 17 percent in 2024, needs an increase in the price cap to stimulate supply and improve borrowers' financial capacity, especially through increased budget allocations for initiatives like PMAY.
Fiscal measures to boost the sector
NAREDCO's Babu said increasing the income tax deduction limit on interest payments under Section 80C from Rs 2 lakh to Rs 5 lakh will make homeownership more accessible and also voiced his hope that interest rates would come down.
Abhishek Tharwani, director at theMumbai-based Tharwani Realty, said that initiatives like reduced GST on construction material, streamlined approval processes and tax benefits for affordable and mid-segment housing can significantly drive demand in tier 2 and 3 cities.
Incentives for REITs
Experts demanded that the budget should offer tax incentives, including a simplified structure, and sops for the development of green buildings to popularise REITs as an asset class among investors.
"Introducing tax benefits for REITs, particularly the exemption of double taxation on dividend income, would be a highly welcome move," said Arvind Nandan, managing director of research and consulting at Savills India.
Experts said that such reforms could also pave the way for increased foreign investments, fostering greater market dynamism.
Push for co-working segment
In another sunrise sector in real estate, co-working spaces, operators say that more measures should be put in place to make it easier for startups to do business.
Rajat Kapur, managing director, North India, UAE and Kingdom of Saudi Arabia at The Executive Centre, a co-working space operator, said that with booming demand in commercial real estate, the flexible workspace industry is poised to play a crucial role in meeting the evolving needs of modern businesses.
“Simplifying processes for GCCs (global capability centres) to set up offices in India will further enhance the country's position as a global business hub. Initiatives to streamline investments and enhance urban infrastructure will empower co-working players to drive growth and innovation while contributing to India’s economic progress,” he said.
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