As the Finance Minister Nirmala Sitharaman will table the budget for the fiscal year 2025-2026 on February 1, 2025 (Saturday), expectations from different sectors are pouring in. Likewise, as the real estate sector stands poised for crucial new reforms to drive its growth in 2025 and beyond, the industry stakeholders have listed down some of their expectations from the upcoming budget.

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“Elevated borrowing costs amid sticky inflation led to a sharp rise in construction costs in 2024. These costs are expected to further increase on the back of supply chain disruptions due to increasing geopolitical conflicts. Amid rising costs and a demand slowdown, the real estate sector’s expectations from the upcoming budget are at an all-time high," said Shrinivas Rao, FRICS, CEO, Vestian. 

Aligning affordable housing price limit with rising development costs in metro cities

Piyush Bothra, Co-Founder and CFO, Square Yards said, "A key priority is adjusting the affordable housing price cap beyond the current Rs. 45 lakhs to align with rising development costs in metropolitan areas." Earlier, the real estate body CREDAI also suggested that the ceiling on affordable housing should be increased from the current Rs 45 lakh to Rs 80 lakh. 

Moreover, the industry demands broadening the scope of affordable housing to boost the sector's growth.

Hike in tax deduction limit on home loan interest 

For bringing the much needed relief for aspiring homebuyers, the industry has also demanded a hike in tax deduction limit on home loan interest from Rs 2 lakh to Rs 4 lakh. 

Including REITs under Section 80C 

Introducing tax incentives under Section 80C for investments in REITs can promote real estate as an attractive tax-saving avenue, drawing new investors to the sector, added Bothra. 

Grant of 'industry' status to the real estate sector

The sector has been seeking 'industry' status for long for streamlining regulations, boosting growth and attracting investments. There is a view that the grant of industry status will enable small-scale real estate players get access to cheaper loans. Further, there is a viewpoint that the status would help the government realise its goal of 'housing for all'.

Streamlining and rationalization of GST levy across segments

Reduced GST rates will further enhance market vibrancy, creating a more accessible pricing structure, added Bothra. For residential properties, the rationalisation has led to lower GST rates, nonetheless, since ITC cannot be availed by this sector, the overall cost of housing becomes costlier.

These measures have the potential to catalyse substantial demand, ensuring a stronger, more sustainable real estate market in the years ahead, remarks Bothra.

Badal Yagnik, CEO, Colliers India meanwhile said, "Budget 2025 is expected to build cornerstones to drive the next phase of elevated growth in Indian real estate with an ambition to reach USD 1 trillion by 2030. Transformative measures in the form of incentives & favourable polices to fuel infrastructure, economic and real estate development in tier 2 cities, technology-led infrastructure & growth corridors and incentivizing green building adoption will draw significant domestic and foreign institutional capital."