The NDA government’s return to power for a third consecutive term has raised expectations for a forward-looking Union Budget that will outline a strategic roadmap for the next five years. Like many others, the developer community is eagerly anticipating the budget announcements and voicing their essential requests that could influence the sector’s direction in times to come.
Developers and realty consultants believe the government has the ability to accelerate the real estate sector by allocating resources and enacting beneficial policies, which can lead to job growth and boost economic activities.
“Expectations are high for tax reliefs and other sentiment boosters. The future of the overall industry also depends on unfettered infrastructure deployment to support and improve urban living standards as well as to develop and promote newer areas,” says Anuj Puri, Chairman, ANAROCK Group.
The Indian housing sector remained upbeat in 2024 till date, with housing sales and new launches creating new peaks in the top 7 cities. Sales reached an all-time high at about 4.93 lakh units in FY23-24, while 4.47 lakh units were launched.
However, “this momentum must continue in the future too – and the current growth trajectory is skewed towards mid-range and premium housing. Considering the specific housing needs of India’s lower-income groups, this momentum cannot ride solely on higher-priced homes while affordable housing continues to languish,” observes Puri.
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Many interest stimulants previously extended to buyers and developers of affordable housing have expired in the last two years. This important segment must be revived with high-impact measures like tax breaks – for developers, so that they will focus more on affordable housing, and for buyers to improve affordability.
Amit Goyal, Managing Director, India Sotheby’s International Realty, says they expect announcements that will encourage capital investments and increase foreign direct investment (FDI) inflows into India. In the real estate sector, it is crucial to sustain demand for homes, as housing acts as an accelerator for over 200 ancillary sectors.
“One significant measure that has been pending for a long time and would benefit both the industry and home buyers is the introduction of a standalone deduction for home loan principal repayment, along with raising the tax breaks on the interest amounts of home loans from Rs 2 lakh to Rs 5 lakh. This move would help mitigate the impact of increased home loan EMIs and provide much-needed relief to home buyers. There is no better time than now to implement this change, which would provide much-needed relief and stimulate growth in the housing market,” adds Goyal.
Securing industry status will unlock a plethora of legal and administrative benefits, along with much-needed tax incentives. Also, “while the government’s focus on affordable housing under PMAY is commendable, recalibrating strategies in light of escalating construction costs is imperative for sustained inclusiveness and effectiveness. Moreover, enhanced tax reliefs and increased deductions on home loans are pivotal in stimulating demand and supporting prospective buyers. With these measures in place, the real estate sector is poised to contribute meaningfully to India’s journey towards a 5 trillion-dollar economy,” says Shubhi Jain, Principal Partner & Head of CRM, Square Yards.
Developers also anticipate a budget that tackles pressing issues, boosts demand, and drives sustainable growth.
Shrinivas Rao, FRICS, CEO, Vestian, says, “As per the announcements in the interim budget, it is evident that the government will continue to focus on infrastructure development to make India a USD 5 Tn economy in the upcoming years and turn the country into a ‘Viksit Bharat’ by 2047. To achieve this goal, the real estate sector is likely to play a pivotal role.”
The government has already announced the construction of 3 crore new units under PMAY. This shows the government’s commitment towards the real estate sector. “Demand for residential units is expected to increase further, if the government increases tax exemption limits for home loans in the Union Budget 2024-25. Moreover, granting industry status to the real estate sector would ease availability of funds and increase participation of foreign investors,” Rao added.
The upcoming budget should provide greater benefits to the salaried class as they have played a pivotal role in record-high direct tax collections.
“One such step would be to increase the tax exemption limit on both the principal amount and interest paid on home loans. Amid substantial rise in property value over the last couple of years, the current Rs 2 lakh tax rebate on housing loan interest should be enhanced to a minimum of Rs 5 lakh. Such a step will boost demand for residential properties. Similarly, a separate section should be introduced for the deduction against home loan principal repayment as the present Rs 1.5 lakh limit under section 80(C) is inadequate,” says Mohit Jain, Managing Director, Krisumi Corporation.
Given the government’s ongoing push for Housing for All, the relaunch of the CLSS scheme, which will boost housing demand across various segments, is also expected.
