Union Budget 2025 Expectations Highlights: Stakeholders push for reforms to revive housing segment, green energy sector

While the C&I sector has been at the forefront of adopting renewable captive power projects, it faces rising surcharges and costs that are pushing up the landed cost of power. A reduction in third-party open access charges could provide significant relief to the sector.

·         Investment Needs in Infrastructure:

Industry stakeholders are calling for greater investments in transmission infrastructure, energy storage, and domestic manufacturing. These investments are necessary to support the nation’s green energy transition.

·         Call for Regulatory Clarity:

According to Dibyanshu Sinha, partner at Khaitan & Co, new energy players are seeking clarity and consistency in regulatory frameworks. This will foster a more stable investment environment, especially in the commercial and industrial (C&I) sector, which has been leading the adoption of renewable energy projects.

India is aiming to achieve 500 gigawatts (GW) of non-fossil fuel power by 2030, requiring nearly 50 GW of capacity additions annually, a significant increase from the current pace of 28 GW per year. This ambitious shift will require an estimated $1 trillion investment over the next decade.

Renewable Energy Target:

To meet its 2030 target, India needs to ramp up renewable energy installations to 50–60 GW annually, alongside expanding energy storage to at least 20 GWh per year.

Industry leaders said that collaboration between the government and private developers is key to accelerating affordable housing delivery.

Expert Views:

Vijay Kamboj, founder of BRIC-X INFRA, highlighted the need for lower interest rates on loans to make homes affordable for low- and middle-income families.

Mohit Goel, Managing Director of Omaxe Limited, advocated for increased funding under PMAY and fiscal incentives for both developers and buyers to sustain the sector's momentum.

Mohit Mittal, CEO of MORES, stressed rationalizing GST rates and extending PMAY benefits to revive demand.

CREDAI and other industry experts have outlined various fiscal measures to encourage affordable housing development:

Tax Benefits for Developers:

Extend the lower 15% income tax rate currently available to manufacturing companies to affordable housing projects.

Tax Breaks for Buyers:

Enhanced deductions on home loans and reduced stamp duty charges can make housing more accessible.

To support low- and middle-income groups, CREDAI has proposed a Credit Guarantee Scheme:

Key Features:

Cover housing loans up to Rs 70 lakh.

Include home improvement loans up to Rs 30 lakh.

This initiative would mitigate risks for lenders, reduce reliance on high-cost private financing, and improve financial inclusion.

The CLSS for Economically Weaker Sections (EWS) and Low-Income Groups (LIG) under PMAY expired in 2022. Experts are calling for its reinstatement to stimulate first-time home purchases.

Expanded Benefits:

Suggestions include extending subsidies to loans for new construction or adding essential features like kitchens and toilets to existing homes. Under PMAY (Rural), subsidies could help convert temporary homes into permanent structures, benefiting a wider section of society.

Experts argue that the current price cap for affordable housing needs urgent revision.

Recommendations:

Puri suggested raising the cap from Rs 45 lakh to Rs 85 lakh in Mumbai and Rs 60-65 lakh in other metros to align with market realities. This adjustment would allow more properties to qualify as affordable housing, granting buyers access to lower GST rates (1% without ITC) and subsidies.

Once a flourishing sector, affordable housing—defined as homes priced under Rs 40 lakh—has faced declining demand and supply since the pandemic

Market Trends:

According to ANAROCK data, the sales share of affordable housing fell to 18% in 2024, down from 38% in 2019. Similarly, its share of total housing supply in the top seven cities dropped from 40% in 2019 to 16% in 2024.

ANAROCK Chairman Anuj Puri emphasized that limited availability of urban land, particularly in high-demand areas, remains a significant challenge for the segment.

The Confederation of Real Estate Developers Associations of India (CREDAI) has urged the government to redefine affordable housing criteria by delinking unit prices from carpet area restrictions.

Proposed Changes:

CREDAI President Boman Irani suggested updating thresholds to 70 square metres for metro cities and 90 square metres for Tier 1 cities. These adjustments aim to attract developers to affordable housing projects while making homeownership accessible to a broader income demographic.

The Government of India (GoI) is expected to achieve a fiscal deficit target of 4.5% of GDP by FY26. After this, the focus is likely to shift toward addressing the target debt ratio, a more complex challenge. However, there remains uncertainty about the GoI's intent or willingness to prioritize measures for boosting domestic consumption growth. That said, the forthcoming Union Budget may introduce tax reforms to support low-income individuals, employment schemes, or investment allowances to stimulate economic activity.

Union Budget 2025-26 is expected to hike the gross budgetary support (GBS) to the Ministry of Railways (Indian Railways) by 15-18 percent to around Rs 2.9 lakh crore-Rs 3 lakh crore, officials aware of the ongoing discussions told Moneycontrol. The budget is set to be presented on February 1, 2025. (Read More)

• The minimum tax slab for individuals under the new tax regime should be raised from the current Rs 3 lakh to Rs 5 lakh, ensuring no tax is payable up to this limit.
• Additionally, the existing 100% tax rebate for individuals with a total income of up to Rs 7.5 lakh should be extended to those earning up to Rs 10 lakh. This adjustment would provide greater relief for taxpayers opting for the new regime.

• India’s tax reforms should aim to empower the middle class and promote compliance. Transitioning from the old tax regime to a streamlined new system, with a reduced average tax rate of 10% for incomes up to Rs 20 lakh, would alleviate financial burdens, boost savings, and drive economic growth. Currently, an average tax rate of 10% is levied on incomes up to Rs 15 lakh. Extending this benefit to Rs 20 lakh would provide significant relief and encourage greater tax compliance.
• Another pressing concern for taxpayers is the burden of multiple taxes. For instance, if an individual earns Rs 5 lakh in a month and pays income tax on it, the same amount is also subjected to registration charges and GST if used for purchasing a house. Establishing synchronization between direct and indirect taxes would simplify the system and foster greater public support for the nation’s tax framework.
• A simple, fair, and rewarding tax system not only reduces financial strain but also enhances transparency, ultimately strengthening the economy. - CA Inderjeet Singh, Partner, AHSG & Co LLP

• As India’s electric mobility sector prepares for an era of unprecedented growth, the Union Budget 2025-26 will play a pivotal role in shaping its trajectory. At ZELIO E Mobility, we believe that introducing long-term subsidies similar to the FAME scheme is essential to support the industry’s growth and encourage widespread adoption of electric vehicles. Consistent policy support will provide manufacturers with the confidence to invest in innovative solutions and scale production effectively.
• We also urge the government to prioritize subsidies for establishing EV manufacturing plants. Supporting this capital-intensive infrastructure will position India as a global leader in EV production, stimulate local economies, and drive technological advancements.
• Additionally, simplifying access to financial services is crucial for the industry. More accessible lending schemes and flexible credit options from banking institutions will enable EV manufacturers to expand their operations and bring high-quality products to market more rapidly.
• Furthermore, we advocate for reducing the GST on spare parts from the current 28% to a more practical range of 5-12%. Such an adjustment would significantly lower production costs, allowing manufacturers to pass on the savings to consumers, thereby accelerating the adoption of electric vehicles and ensuring a sustainable future for India’s mobility sector. - Kunal Arya, Co Founder & Managing Director at ZELIO E Mobility

The Union Budget will be announced on February 1, and while investors are eagerly anticipating market-friendly measures, a Moneycontrol analysis reveals that equity markets typically see positive performance in the month and three months following the Budget.

Out of the 13 Budgets since 2014, both the Sensex and Nifty posted gains in seven instances, averaging a return of 3.5%. In contrast, the markets showed mixed results in the month leading up to the Budget, with gains in eight cases and losses in five.

However, over the three months after the Budget, both indices recorded positive returns in seven of those 13 instances. Read here.

The senior living sector of India’s real estate industry is looking to the upcoming Union Budget for measures that could help boost the segment, including more financing options for homes, lower taxes, and reduced statutory payments.

Senior living is forecast to be a $7.7 billion market by 2030, with demand for approximately 2.3 million senior housing units.

However, the current penetration rate stands at only about 1.3%, significantly lower than that of developed economies like the United States and Australia.

This disparity highlights the growth potential of the sector, which is increasingly seen as a key opportunity for real estate investment. Learn more.

The insurance penetration in the life insurance industry slightly decreased to 2.8% in 2023-24, down from 3% in the previous year. Meanwhile, the penetration in the non-life insurance sector remained unchanged at 1% during 2023-24, the same as in 2022-23.

Insurers are hoping for tax benefits for policyholders and incentives for selling insurance policies in their wishlist for the upcoming Union Budget, as India is projected to become the fastest-growing insurance market within the G20. According to the Insurance Regulatory and Development Authority of India (IRDAI), the country's insurance penetration stood at 3.7% in 2023-24, down from 4% in 2022-23.

To strengthen railway infrastructure, the upcoming budget may announce new orders for rolling stock, freight train coaches, and wheels. These initiatives are expected to benefit companies like BHEL, BEML, RVNL, IRFC, and Titagarh, driving their growth and potentially enhancing their stock performance.

The upcoming Union Budget for the financial year 2025-26 is likely to include significant announcements for the railways, including the introduction of new Vande Bharat and Amrit Bharat trains to connect various regions of the country. Furthermore, the government is expected to expand the list of stations covered under the Amrit Bharat Station Yojana. This initiative aims to modernize 1,275 railway stations, enhancing passenger amenities and giving them a more contemporary appearance.

The government is gearing up for the presentation of the Union Budget for the financial year 2025-26, with numerous sectors and stakeholders eagerly anticipating key measures. In the railway sector, both companies and regular passengers are looking forward to significant provisions in the budget. It is widely expected that the government will make substantial announcements aimed at furthering the development of the railway sector. Experts predict that the budget allocation for railways could see an 18% increase this year, signaling a continued focus on enhancing infrastructure and services.

The countdown has officially begun for the Union Budget 2025. As the date for the budget presentation in Parliament approaches, several sectors have actively expressed their concerns and put forth their demands to Union Finance Minister Nirmala Sitharaman. This year’s budget is anticipated to address a wide range of economic and sectoral priorities, and stakeholders across industries are eager to see how their expectations will be met. Stay tuned as we bring you the latest updates, insights, and key developments surrounding the Union Budget 2025.