Upcoming Budget Must Be Futuristic With Thrust On Accelerating Sectoral Growth

Withyet another Union Budget round the corner, the country’s realty sector is looking forward to bold and progressive measures to bolster its growth and thereby contribute significantly to the nation’s economic progress, quite like other sectors. The real estate sector, a critical contributor to the nation’s GDP and a significant employment generator, requires sustained focus and support to maintain its upward trajectory. And granting it industry status remains a key demand. This will enable easier access to institutional funding at lower interest rates, particularly for mid-segment and affordable housing projects. To ensure the success of initiatives like PMAY-U, it is imperative to increase budgetary allocations for affordable housing and expand credit-linked subsidies. Even revising income tax deduction limits under Section 24(b) for home loan interests can enhance housing affordability and boost the flow of funds into the affordable housing sector, which has seen a slowdown in recent months. Additionally, reducing GST rates for under-construction properties can encourage buyers and increase project sales. The current GST regime remains ambiguous and poses a significant challenge for developers.

Simplifying, streamlining and reducing GST Tax rates are imperative to alleviate the financial burden on developers. The Finance Minister needs to keep in mind that stamp duty rates in certain states, currently as high as 8-9 per cent, are a major financial burden for homebuyers. Rationalizing these rates across states for homes up to Rs. 1.50 crore is crucial to drive housing demand. To deepen the investment market, making REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) more tax-efficient and accessible to retail investors would stimulate institutional and global interest in Indian real estate. Interestingly, encouraging investments in Real Estate Investment Trusts (REITs) through tax benefits and regulatory support can provide liquidity to the sector. Similarly, rental housing can play a pivotal role in addressing urban housing shortages and supporting mobility of the workforce. The Centre should introduce incentives and policy support for developing affordable rental housing complexes, ensuring access to quality housing for tenants.

In line with the global focus on the ESG criteria, introduction of subsidies or incentives for green building certifications and renewable energy integration in residential and commercial projects would be a welcome move. The government should promote green and sustainable real estate practices through tax rebates and incentives to developers adopting eco-friendly building technologies and materials.

This also aligns with the country’s commitment to achieving carbon neutrality. Another segment that needs a look in is NRI home buyers. Considering the growing interest of NRIs in Indian real estate, specific measures such as streamlined repatriation processes, reduced tax burdens on property transactions and enhanced ease of investing in residential and commercial properties could significantly boost NRI investments. After all, the real estate sector plays a pivotal role in achieving the $five trillion economy status. One hopes that the Union Budget 2025-26 will reflect a balanced and forward-looking approach that addresses key challenges and accelerates sectoral growth. The real estate sector has always played a pivotal role in driving GDP growth and generating employment. There is all-round optimism that the upcoming budget will address these expectations and create a conducive ecosystem for developers, homebuyers and investors alike.