NEW DELHI: The Indian real estate sector anticipates transformative policy changes in the upcoming Union Budget 2025, with key stakeholders advocating for industry status, tax reforms, and enhanced financial incentives to boost investment, streamline operations, and stimulate demand across the sector.
Industry status and financial reforms
A long-standing demand of the real estate sector has been the grant of industry status, which stakeholders believe would unlock affordable funding and streamline regulatory processes. Pradeep Aggarwal, founder & chairman, Signature Global (India), emphasized, “Granting industry status to real estate could invigorate over 200 allied sectors, create jobs, and amplify economic activity, further solidifying the sector’s role as a cornerstone of India’s economy.”
Echoing this sentiment, Murali Malayappan, chairman & managing director, Shriram Properties, urged, “Industry status would facilitate affordable funding, streamline approvals, and benefit developers. Additionally, rationalizing GST rates for under-construction properties and reintroducing input tax credit would greatly support the sector.”
Manish Mehan, CEO and MD, TK Elevator India, added that the real estate sector needs “enhanced tax reliefs, increased funding, and the long-awaited grant of industry status to realize its full potential.”
Policy reforms such as reintroducing Section 80IBA incentives and removing MAT provisions are essential to reviving affordable housing development. Buyers will benefit from measures like restoring the interest subvention under PMAY for loans up to Rs 6 lakh and offering fixed interest rates of 5% for loans up to Rs 25 lakh, said G Hari Babu, national president, NAREDCO.
Tax reforms and housing demand
Tax reforms remain a crucial expectation, with experts advocating for increased exemptions on home loan interest and principal. Aggarwal suggested, “Revising the tax exemption limit on housing loans to Rs 5 lakh would provide significant relief to homebuyers and boost demand across the sector.”
Dhruv Agarwala, group CEO, Housing, concurred, stating, “Raising the tax exemption limit on home loan interest, which has remained stagnant for years, is essential to easing the financial burden on homebuyers and enhancing affordability.”
Anshuman Magazine, chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, emphasized that “introducing tax incentives for REIT investments and simplifying access to funding for real estate developers could bring much-needed liquidity to the sector.”
Rental housing and commercial real estate reforms
Rental housing policies also require reform to improve affordability and encourage investments. Niranjan Hiranandani, chairman, NAREDCO, called for the deletion of notional income from house property held as stock-in-trade, stating, “Current provisions that set off losses from income from house property disincentivize rental housing investment. Removing this section would encourage the creation of a sufficient rental housing stock, aligning with the ‘Housing for All’ objective.”
Additionally, discontinuing the deemed rental income tax on unsold inventory under Section 23(5) and increasing the safe harbor limit from 10% to 25% will align stamp duty rates with market realities, fostering higher transaction volumes, said Hari Babu.
In commercial real estate, Shesh Rao Paplikar, founder and CEO, BHIVE Workspace, urged for “multiple fiscal incentives, tax benefits, and reforms aimed at empowering developers and operators in the flexible workspace segment.” He also called for REITs to be classified as equity investment instruments, lowering TDS rates for coworking operators, and enabling them to claim Input Tax Credit under GST.
Sustainability, senior living, and infrastructure growth
A push toward sustainability is another key expectation. Rakesh Reddy, director, Aparna Constructions, stressed the importance of “financial incentives for adopting green and sustainable building practices, such as tax rebates or grants for projects prioritizing renewable energy, water conservation, and energy efficiency.”
Additionally, the demand for senior living homes and student housing is rising. Harsh Parikh, partner, Khaitan & Co, pointed out, “Strong policies and incentives for these segments will open floodgates for foreign investments. Moreover, clarification that long-term leases of 60 to 90 years should be excluded from GST would significantly benefit commercial and office sectors.”
Ramani Sastri, chairman & MD, Sterling Developers, urged for enhanced ease of doing business for developers, while Kalyan Chakrabarti, CEO, Emaar India anticipates measures that will benefit the customers while driving the growth of the industry. “We are optimistic that in the forthcoming union budget the government will take steps towards advancing the real estate sector as we continue to seek an industry status for the sector,” he said.
Source Homevior.in
