Real Estate Industry Pushes for Tax Incentives and Affordable Housing Reforms in Budget 2025

With the Union Budget 2025 just around the corner, real estate industry heads are expecting the government to announce reform measures to push homeownership and the sector’s growth. Finance Minister Nirmala Sitharaman will present the budget on February 1, 2025, so there is a lot of expectation from the industry, where tax incentives and the definition of affordable housing are expected to be expanded.

Developers are demanding that the government exempt GST on joint venture agreements to make the transaction of real estate joint ventures easier. The other primary area under this focuses on reducing the GST rate on the key construction materials such as steel and cement to reduce the input cost to make housing affordable for customers. This includes also increased demand for home loan tax deductions, a revival of input tax credits under GST, and an extension of the tax holiday period for affordable housing projects.

“The definition of affordable housing needs to be redefined with the market reality,” said the president of CREDAI Maharashtra, Pramod Khairnar Patil. He advocated increasing the limit of tax deduction for interest paid on home loans under Section 24(b) from Rs 2 lakh to Rs 5 lakh to enhance homeownership. He also requested permission to accept FDI in LLPs, which would help ease doing business in real estate.

These calls were echoed by Aashish Puravankara, MD of Puravankara, who called for tax relief in the form of a Rs 5 lakh deduction on home loan principal and interest for homebuyers. He also urged a redefinition of affordable housing to reflect the Rs 80 lakh price cap as against the Rs 45 lakh earlier, reflecting market conditions.

JK Lakshmi Cement’s Arun Shukla pointed out the reduction of GST on cement from 28% to 18% which should help in cutting costs and making products more affordable. Welspun One’s Anshul Singhal on his part sought simplification of the land acquisition process and incentivized green building to promote sustainability.

In addition, developers have also asked for better liquidity and availability of credit through softer credit terms for developers and quicker approvals for the timely completion of projects. According to industry experts, these reforms will not only make affordable housing a reality in India but also boost investment in India’s real estate market.