With the Union Budget 2025–26 around the corner, India's real estate industry is making a compelling case to the government for policy interventions that could unlock massive housing demand and accelerate investment.
Top 5 Industry Demands
1. Raise Section 80C and 24(b) Limits: The current ₹2 lakh deduction on home loan interest has been unchanged for over 10 years. CREDAI and FICCI are requesting this to be raised to ₹5 lakh to account for rising property prices and loan sizes.
2. Expand PMAY to Middle Income Group: The Pradhan Mantri Awas Yojana currently covers EWS and LIG segments. Extending the scheme to the Middle Income Group (MIG-III, ₹18–25 lakh annual income) would be transformative.
3. Reduce Long-Term Capital Gains (LTCG) Holding Period: Currently, a property must be held for 24 months to qualify for LTCG (20% with indexation). The industry wants this reduced to 12 months, aligned with equity investments.
4. GST Rationalization on Under-Construction Properties: GST on under-construction properties remains at 5% (without ITC) and 12% (with ITC) for affordable and non-affordable projects respectively. A flat 5% with input credit pass-through would reduce prices by 3–8%.
5. Infrastructure Investment Stimulus: Additional allocation to the National Infra Pipeline (NIP) for tier-2 and tier-3 city real estate infrastructure — roads, sewage, power — would unlock massive demand in emerging markets.
What Can We Realistically Expect?
Budget 2024 was broadly neutral for real estate. Given that the government is focused on fiscal consolidation (deficit target: 4.5% of GDP in 2025-26), major tax breaks are unlikely. However, targeted measures around PMAY expansion and digital land records are probable, with at least one or two industry-friendly announcements expected.
