On January 6, Union Finance Minister Nirmala Sitha- raman concluded a month-long consultation with industry and sector stakeholders ahead of the 2025 Budget presentation. One key proposal mentioned by various real estate leaders has been the raising of tax exemption limit on housing loans under Section 24(b) of the Income Tax Act from Rs 2 lakh to Rs 5 lakh. This adjustment alone could offer substantial financial relief to homebuyers, stimulating demand, especially within the middle-income bracket and spur demand for residential properties, making homeownership more affordable for the middle-income segment.
Furthermore, reintroducing the Credit Linked Subsidy Scheme (CLSS) for first-time would mean, homebuyers could play a pivotal role in advancing the “Housing for All” initiative, facilitating increased homeownership for millions.
On the supply side, the experts recommended reinstating the 100% tax exemption under Section 80- IBA of the Income Tax Act for affordable housing projects is crucial. This incentive, which expired in 2022, incentivized developers to prioritize affordable housing-a sector vital for meeting India’s urban and rural housing requirements. Its reintroduction is likely to reignite interest and investments in this essential segment.
In addition, offering tax holidays for developers could drive project development. Improving liquidity for developers and introducing incentives to attract both domestic and foreign investments is also important.
The sector anticipates that the upcoming budget would provide an opportunity to address the hurdles posed by increased borrowing and construction costs with measures such as revising the affordable housing price cap to align with rising metropolitan development costs, increasing the tax deduction limit on home loan interest, rationalizing GST rates and incentivizing green building adoption will help build a sustainable, technology-led growth trajectory.
Amendments to GST regulations, such as allowing input tax credit on under-construction properties, can reduce costs for developers and end-users.
Additionally, reducing the GST rate on cement from the current 28% to 18% would lower construction costs, thereby promoting growth in the housing sector.
Furthermore, the introduction of tax incentives REIT investments could bring much-needed relief to homebuyers and attract new investors. To enhance liquidity includes simplifying access to real estate devel- opers’ funding and focusing on the affordable housing and commercial sectors.
Adjustments to the Real Estate Investment Trust (REIT) framework, combined with tax breaks on long-term capital gains, may encourage increased institutional investment in the real estate market.
Another favorable step for the industry will be fostering private investments through Alternative Investment Funds (AIFs) and offering tax incentives to institution- al investors will ensure liquidity and enable ambitious projects.
Expectation from The RBI in 2025 is repo rate reduction of 50 basis points or more that will lead to lower interest rates, enhancing housing affordability. “In 2024, housing prices surged by 21%, and a modest increase is projected for 2025. A repo rate cut has the potential to address affordability, boosting demand, and promoting sustainable growth,” say the real estate developers.
Infrastructure development should remain a priority, with increased budgetary allocations for urban renewal projects and connectivity initiatives. The previous year’s capital expenditure saw a significant increase, and a similar push this year could accelerate growth, particularly in tier 2 and 3 cities.
Besides, earmarking at least ?10 lakh crore for infrastructure development, as part of the envisaged ?100 lakh crore investment plan over five years, will enhance connectivity and create new corridors of growth across the country thus improving the quality of life and the economic viability of the emerging cities.
With a balanced regulatory and monetary approach estate sector can support urban transformation, job creation, and contribute to the vision of ‘Housing for All,’ particularly in emerging Tier-II cities.
REIT investments could bring much-needed relief to homebuyers and attract new investors. To enhance li- quidity includes simplifying access to real estate devel- opers’ funding and focusing on the affordable housing and commercial sectors.
Adjustments to the Real Estate Investment Trust (REIT) framework, combined with tax breaks on long-term capital gains, may encourage increased institutional investment in the real estate market.
Another favorable step for the industry will be fostering private investments through Alternative Investment Funds (AIFs) and offering tax incentives to institution- al investors will ensure liquidity and enable ambitious projects.
Expectation from The RBI in 2025 is repo rate reduction of 50 basis points or more that will lead to lower interest rates, enhancing housing affordability. “In 2024, housing prices surged by 21%, and a modest increase is projected for 2025. A repo rate cut has the potential to address affordability, boosting demand, and promoting sustainable growth,” say the real estate developers.
Infrastructure development should remain a priority, with increased budgetary allocations for urban renewal projects and connectivity initiatives. The previous year’s capital expenditure saw a significant increase, and a similar push this year could accelerate growth, particularly in tier 2 and 3 cities.
Besides, earmarking at least Rs 10 lakh crore for infrastructure development, as part of the envisaged ?100 lakh crore investment plan over five years, will enhance connectivity and create new corridors of growth across the country thus improving the quality of life and the economic viability of the emerging cities.
With a balanced regulatory and monetary approach estate sector can support urban transformation, job creation, and contribute to the vision of ‘Housing for All,’ particularly in emerging Tier-II cities.
With a balanced approach, the real estate sector can support urban transformation, job creation, and contribute to the vision of ‘Housing for All,’ particularly in emerging Tier-II cities.
Reintroducing the Credit Linked Subsidy Scheme (CLSS) for first-time would mean, homebuyers could play a pivotal role in advancing the “Housing for All” initiative, facilitating increased homeownership for millions.
The sector anticipates that the upcoming budget would provide an opportunity to address the hurdles posed by increased borrowing and construction costs.
Improving the availability of real estate finance could work towards achieving the goal of reducing the cost of owning a house, which has become important in the wake of cities’ annual urban housing prices inflation of about 6-8%.
