– By Amit Jain
As the Union Budget 2025 approaches, the Indian real estate sector, a cornerstone of economic growth and employment, eagerly anticipates reforms that could propel its recovery and long-term sustainability. While the industry has demonstrated resilience despite global economic uncertainties, key structural and financial interventions are critical to address affordability challenges, incentivize investments, and stimulate demand.
One of the most pressing demands from real estate stakeholders is the enhancement of affordability for homebuyers. With rising input costs and interest rates weighing on housing prices, developers are seeking targeted tax benefits to reduce the financial burden on buyers. An increase in the deduction limit under Section 80C for principal repayment of home loans and a revision of the Rs. 2 lakh cap under Section 24(b) on interest payments are widely expected. Such measures would make homeownership more accessible, particularly for first-time buyers.
Additionally, there is a growing demand to extend the PMAY (Pradhan Mantri Awas Yojana) scheme to include middle-income groups in urban areas, given the surge in demand for affordable and mid-segment housing. Enhanced funding and faster disbursal of subsidies under PMAY could significantly impact housing demand in emerging cities.
Real estate developers are seeking rationalization of GST and stamp duties to create a more favorable taxation environment. The industry has consistently advocated for a unified taxation structure to eliminate the burden of double taxation on homebuyers and developers alike. Developers are also urging the government to introduce single-window clearance mechanisms to expedite project approvals, thereby reducing delays and costs associated with compliance.
The revival of input tax credit (ITC) for residential projects is another key expectation. If reinstated, ITC could help developers reduce construction costs and pass on the benefits to buyers, enhancing affordability across the housing spectrum.
Foreign direct investment (FDI) continues to be a critical driver of growth in the real estate sector. Industry experts are urging the government to relax FDI norms further, particularly for affordable housing and rental housing projects. Encouraging institutional investments through tax rebates or easing restrictions could attract significant capital, fostering large-scale developments and creating a more structured rental housing market.
Infrastructure development remains pivotal to unlocking the potential of real estate in peripheral and Tier 2 and 3 cities. Budget 2025 is expected to prioritize allocations for highways, metro projects, and smart cities initiatives, creating a ripple effect on housing demand in these regions. Improved connectivity and infrastructure can significantly enhance the value proposition of properties in emerging markets, driving both residential and commercial growth.
With the pandemic accelerating a shift in living patterns, there is a renewed focus on rental housing. The sector seeks clarity on the taxation framework for rental income and incentives for developers to build rental housing projects. Policies that incentivize co-living and shared housing models, popular among young professionals and students, could also witness a push in the upcoming budget.
Sustainability has become a central theme for both policymakers and industry players. The real estate sector expects the government to announce incentives for green building certifications and renewable energy integration in housing projects. Subsidies for adopting eco-friendly materials and technologies could align the industry with India’s net-zero targets, ensuring sustainable urbanization.
The real estate sector contributes nearly 8% to India’s GDP and is projected to reach a market size of $1 trillion by 2030. However, its full potential remains untapped due to regulatory and financial bottlenecks. Addressing the long-standing concerns of affordability, taxation, and infrastructure development in Budget 2025 could not only revitalize the sector but also create a multiplier effect on the economy.
By balancing fiscal prudence with targeted reforms, the government has an opportunity to transform real estate into a more robust and inclusive growth engine. For millions of Indians aspiring to own homes, this budget holds the promise of converting dreams into reality while laying the groundwork for a stronger and more sustainable real estate landscape.
(Amit Jain, CMD, Arkade Developers.)
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