The Indian real estate sector has urged the government to enhance the monetary cap for affordable housing from the current Rs 45 lakh to at least Rs 75 lakh or even Rs 1 crore, citing rising construction costs and inflation. This demand was highlighted in Grant Thornton Bharat's Pre-Budget 2025 expectations survey.
Key Demands from the Real Estate Sector for Budget 2025
Increase Affordable Housing Limit & Reinstate Tax Deductions
The sector is pressing for a higher price threshold for affordable housing to make homeownership more accessible. Additionally, developers are seeking the reinstatement of tax deductions for affordable housing projects, which were previously available under Section 80-IBA. Reviving these incentives would encourage developers to invest in the affordable housing segment, supporting the government's ‘Housing for All' initiative.
Rationalisation of GST Input Credit for Developers
One of the biggest challenges for developers is the restriction on input tax credit (ITC) under GST. The survey emphasized that rationalizing ITC could significantly reduce project costs, improve cash flow, and lower property prices for buyers. Developers are advocating for a simpler GST structure, especially for under-construction properties, to enhance affordability.
Higher Tax Deductions on Home Loans
With rising home prices and borrowing costs, the sector has urged the government to increase the tax deduction limit on home loan interest payments from Rs 2 lakh to Rs 5 lakh. Further, the deduction for home loan principal repayment should be placed outside the Section 80C limit to provide better tax benefits to homebuyers.
Encouraging Rental Housing & REITs
Given the growing demand for urban housing, stakeholders recommend prioritizing rental housing through policy incentives and funding support. The survey also highlights the need for reforms in Real Estate Investment Trusts (REITs) and foreign direct investment (FDI) policies to boost liquidity in the sector.
Industry Status & Smart Infrastructure Development
For years, real estate players have sought industry status, which would allow easier access to low-cost financing. Industry status for housing, especially affordable housing, could attract more institutional investments and stimulate large-scale developments. Additionally, the sector is advocating for investments in smart cities, urban infrastructure, and digital land records to improve transparency and efficiency.
Blockchain & Tokenization in Real Estate
The future of real estate transactions lies in blockchain-based tokenization, which can simplify property purchases and enhance security. Encouraging innovation in this area with clear regulations could streamline real estate investments and improve transparency in land ownership records.
Budget 2025 Crucial for Real Estate Growth
Grant Thornton Bharat's Real Estate Industry Leader stated that the upcoming Union Budget 2025 is critical amid urban slowdown, fiscal deficits, and global economic uncertainties. He emphasized that GST simplification, rationalized stamp duties, and enhanced tax incentives for affordable housing would boost demand and investments. Strengthening sustainable construction policies and ESG initiatives could further align the sector with global standards.
With real estate being a key contributor to India's GDP and employment generation, industry experts believe that addressing these concerns in Budget 2025 would unlock the sector's full potential and drive long-term economic growth.
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