As the Union Budget of 2025 draws near, the realty sector intensively is lobbying for major policy reforms to set the road for growth and increased availability of housing for all. Of prime concern is clarity on the higher monetary limits set for affordable housing and supply of tax incentives for developers or homebuyers.
Making Affordable Housing Limits Look Up
Industry leaders are urging the government to mitigate the price ceilings for affordable housing. The current thresholds are old and not of this period. They do not show the prevailing market conditions, especially in urban areas, where property prices have escalated.
A raise in these limits will make many more projects eligible for benefits under the affordable housing scheme, thus encouraging developers to invest into this segment. This will be crucial for working towards the government’s ‘Housing for All’ mission.
Restoration of Tax Deductions for Developers
The sector is sounding for the restoration of tax deduction under Section 80-IBA introduced in the Finance Act, 2016. It provided a 100% tax holiday to affordable housing projects and had a massive boosting effect on the availability of affordable homes.
Resurrecting these tax breaks could shift the intentions of developers to work in this space, thereby helping the government meet its ambitious ‘Housing for All’ mission.
Enhancement of Tax Benefits for Homebuyers
There is a strong call for a boost in tax benefits to enhance demand for homebuyers. As it stands, under Section 24(b) of the Act, homebuyers can claim a deduction of up to ₹2 lakh on interest paid on home loans. There should be an increase in this cap upto ₹5 lakh to reduce the load on homebuyers, who are quite stressed as home loan rates have shot up by 2% in the last two years.
Also, the introduction of tax incentives on home loan principal/interest will leave much to be desired in terms of reduced EMIs for the low income group (LIG) segment to create a lodgment of them in reaching the level of homeownership under PMAY Urban 2.0.
It will considerably help India meet its Housing for All mission, provide an impetus for infrastructure growth, and lend support to 400 allied industries that are directly or indirectly affected by general housing development.
Industry Status and GST Rationalization
Demanding recognition as an industry, the real estate sector is also being advocates so that financing is made easier, and borrowing does not cost them much. On the other hand, there is a demand for the rationalization of the Goods and Services Tax (GST) rates of under-construction properties. Making GST easier and lowering them could actually boost sales and liquidity for developers as they would become attractive for home buyers.
Incentives for Sustainable Development
In tune with global trends toward sustainability, the sector is lobbying for tax incentives to facilitate sustainable development, starting with green and energy-efficient buildings. Providing targeted incentives for these industries can have a trickle-down effect on the urban development sector.
Tax concessions for energy-efficient lifts and accessibility-friendly designs have a deep resonance with the larger paradigm shift toward sustainable and inclusive development.
The real estate sector’s expectations from the Union Budget 2025 hinge on policy reforms that increase affordability, stimulate demand, and promote sustainable development. Addressing these issues can help the government to facilitate the growth of the real estate sector, contribute to the promotion of economic development, and make way to a big reach toward ‘Housing for All.’
