7 Major Expectations of the Indian Real Estate Sector from the Central Budget 2024-25

The upcoming Union Budget 2024-25, expected to be presented in the second fortnight of July, has the real estate sector brimming with anticipation. The industry hopes for significant strides, particularly in obtaining industry status and receiving targeted support to fuel growth and stability. 7 of such major expectations have been listed below:

1. Granting Industry Status to Real Estate

The real estate sector has long sought industry status, and there is renewed hope that this demand will be met in the upcoming budget. Granting industry status would pave the way for significant advancements and streamline processes for developers and stakeholders.

2. Sustained Focus on Infrastructure and Urban Development

Continuing government policies aimed at improving urban living standards and developing new areas through infrastructure is crucial. The real estate sector is optimistic that the upcoming budget will include necessary measures to support these initiatives. Badal Yagnik, CEO of Colliers India, highlighted the sector's need for a strategic direction that addresses the growing needs of end-users, developers, and investors alike. 

3. Addressing Affordable Housing Challenges

Srinivas Rao, CEO of Westian, expressed that the upcoming budget should address issues facing the real estate sector, boost demand, and ensure sustainability. Post-COVID-19, affordable housing has seen a significant decline. Incentives previously given to affordable home buyers and developers have expired, and there is a need for the budget to refocus on this segment.

4. Reviving the Credit Linked Subsidy Scheme (CLSS)

The tenure of the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana, aimed at economically weaker and low-income groups, ended in 2022. Anuj Puri, Chairman of Rock Group, suggested that reviving the CLSS would significantly boost demand for affordable housing. The scheme provides financial subsidies on home loan interest rates for purchasing or building new homes, as well as for adding extra rooms, kitchens, or toilets. 

5. Tax Incentives for Affordable Housing

Developers Measures should be taken to increase the supply of affordable housing. Developers building affordable homes should be incentivized. Anuj Puri pointed out that reinstating the previously granted 100% tax holiday under Section 80-IBA of the Finance Act, 2016, would provide substantial tax exemptions on profits earned from affordable housing projects. 

6. Redefining Affordable Housing Criteria

The Ministry of Housing and Urban Poverty Alleviation defines affordable housing based on property size, price, and buyer's income. Shubhi Jain highlighted that the government should reconsider the pricing of affordable homes, taking into account the specific market conditions in different cities. Adjusting these prices would allow more homes to fit the affordable housing definition, enabling more buyers to benefit from government subsidies and lower GST rates. 

7. Increasing Tax Exemption Limits on Home Loans

The central government has announced plans to build three crore new homes under the Pradhan Mantri Awas Yojana, which will boost the real estate sector. Srinivas Rao suggested that increasing tax exemption on home loans would further boost demand for residential properties. The tax exemption on home loan interest repayment should be increased to ₹2 lakh to encourage homebuyers and boost property demand.

Additionally, the Union Budget should include measures to promote retail investor participation in REITs and Infrastructure Investment Trusts and rationalize the tax system on capital gains, as demanded by retail investors. Housing, infrastructure, sustainable development, and digitization will be key themes in this year's budget, aiding the long-term growth of the real estate sector.