Budget 2025 Real Estate - Industry Demands Tax Reliefs, Infrastructure Status & Housing Boost

With the Union Budget 2025 approaching, the real estate sector is pushing for transformative policies to boost housing demand, streamline regulations, and ensure sustainable growth. Industry leaders are advocating for tax incentives, infrastructure status, and policy reforms to make homeownership more accessible.

Demand for Increased Tax Deductions on Home Loan Interest

Making Homeownership Affordable

Niranjan Hiranandani, Chairman of NAREDCO, is urging the government to raise the tax deduction limit on home loan interest from ₹2 lakh to ₹5 lakh. This increase would make home loans more attractive and drive higher demand for residential properties.

Why the Sector Wants Infrastructure Status

Cheaper Loans and Easier Financing

Industry experts are advocating for real estate to be classified as an infrastructure sector. This move would allow developers to access lower-cost financing, reduce borrowing costs, and create a more structured funding ecosystem for housing projects.

Boosting Affordable Housing Through Government Policies

Bridging the Gap Between Supply and Demand

Anuj Puri, Chairman of ANAROCK Group, suggests increasing the ₹45 lakh price cap for affordable housing in metro cities like Mumbai, where real estate prices are significantly higher. This would bring more homebuyers under the affordable housing bracket, making them eligible for government subsidies.

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Reinstating the Credit-Linked Subsidy Scheme (CLSS) for Homebuyers

Encouraging First-Time Buyers

Real estate leaders propose reinstating the Credit-Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY). This initiative, if revived, would provide interest subsidies to first-time homebuyers, making property ownership more affordable for the middle-income segment.

Addressing Rising Construction and Borrowing Costs

Cost Burden on Developers and Buyers

Developers are struggling with high construction costs due to increasing raw material prices and interest rates. Industry leaders are requesting the government to revise lending policies and introduce tax breaks for construction materials to ease financial pressure on developers.

Enhancing Real Estate Investment Trusts (REITs) and Rental Housing

Attracting More Institutional Investors

Experts are urging the government to introduce tax benefits for Real Estate Investment Trusts (REITs) to attract more investors into the sector. Additionally, boosting rental housing programs could provide alternative solutions to urban housing shortages.

GST Rationalization and Sustainability Incentives

Reducing Tax Burden and Encouraging Green Construction

A key demand is the rationalization of GST rates on real estate transactions. Leaders also propose tax incentives for green building initiatives to promote sustainable real estate developments and align with global environmental goals.

Industry Status: A Game-Changer for Developers and Homebuyers

Unlocking Growth Potential

Ritesh Mehta, Senior Director at JLL India, emphasizes that granting industry status to real estate would streamline project financing, lower borrowing costs, and benefit end consumers with more affordable housing options.

Conclusion: Strengthening India’s Real Estate for Economic Growth

The real estate sector contributes nearly 7% to India’s GDP and is expected to play a critical role in economic expansion. Industry leaders believe that granting tax reliefs, infrastructure status, and financial incentives will create a stronger, more resilient real estate market in India.

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