Union Budget 2025: Real estate sector seeks enhancement of monetary limit for affordable housing, tax sops from FM

Union Budget 2025: Real estate sector seeks enhancement of monetary limit for affordable housing, tax sops from FM


The real estate sector is seeking an enhancement of the monetary limit of affordable housing from the current 45 lakh to at least 75 lakh to a crore, a reinstatement of the tax deduction for affordable housing projects and rationalising input credits to developers under GST that would help reduce project costs and potentially lower property prices for buyers, Grant Thornton Bharat has said in its Pre-Budget 2025 expectations survey.

Budget 2025: The real estate sector is seeking an enhancement of the monetary limit of affordable housing from the current <span class=
Budget 2025: The real estate sector is seeking an enhancement of the monetary limit of affordable housing from the current 45 lakh to at least 75 lakh to a crore (Picture for representational purposes only)

The real estate sector is pressing for an increase in the monetary cap for affordable housing from the current 45 lakh to 75-100 lakh, considering rising construction costs and inflation.

Reinstate tax deduction for affordable housing

As for direct tax incentives for real estate developers, the sector wants the government to reinstate the tax deduction for affordable housing projects. “Reviving these tax breaks could incentivize developers to operate in this space, which is critical to achieving the government’s ambitious ‘Housing for All’ mission,” the pre-Budget 2025 survey showed.

Rationalise input credit to developers under GST

The survey also called for simplifying GST laws. The consultant said rationalising input credits to developers under GST would reduce project costs, improve working capital efficiency for developers, and potentially lower property prices for consumers.

Increase housing loan deduction limit

The sector’s wishlist also includes an increase in the housing loan deduction limit. The government needs to raise the tax deduction limit on home loan interest payments from the current 2 lakh to 5 lakh.

“This increase would make homeownership more affordable, particularly for middle-income groups. Besides this, the deduction for the home loan principle should be placed outside the limited window of Section 80C to make it more attractive,” the survey showed.

Integrate the real estate sector with tokenisation

The consultant said that integrating the real estate sector with tokenisation using blockchain technology is the way forward. This would require encouraging innovation and investment and developing clear regulations for tokenising real estate transactions and records.

Encourage rental housing

The government should also focus on encouraging rental housing. To meet growing housing demand and high ownership costs, the government should prioritise funding and incentives for rental housing development. “This will increase affordable rental options, benefit a broader segment of society, and encourage private sector investment to address housing shortages and improve urban affordability,” it said.

Industry status

The real estate sector has been seeking “industry” status for the last two budget sessions and is prioritising it again this year. Granting industry status to the housing sector in Budget 2025 would improve access to cost-effective funding and attract more investments, particularly for affordable housing projects. This would stimulate construction activities, generate employment, and contribute to economic growth, the survey said.

According to Shabala Shinde, Partner and Real Estate Industry Leader Grant Thornton Bharat, the Union Budget 2025 comes at a pivotal time for the real estate sector amid urban slowdown, rising fiscal deficits, and global uncertainties.

Simplifying GST on under-construction properties, rationalizing stamp duties, and enhancing tax incentives for affordable housing are essential to boost demand. Encouraging rental housing, REITs, and FDI can improve liquidity and catalyse investments. Strengthening urban infrastructure, smart cities, and digitised land records will enhance transparency and operational efficiency. Promoting ESG policies and sustainable construction will align the sector with global standards, Shinde said.

Shinde added that the budget must address these challenges to unlock housing accessibility, support long-term growth, and leverage real estate’s potential to drive India’s economy in a complex macroeconomic landscape.



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