Budget 2025: Real Estate Sector Calls for Industry Status, Single-Window Clearance, and Tax Rebates on Housing Loan Interest

2025-01-14 05:27:20

Market experts foresee that reforms such as tax rebates on housing loan interest, revisions to GST input tax credit rules, and the introduction of a simplified single-window clearance system could provide significant momentum to the real estate sector.

The industry has long sought reforms, including the coveted industry status and measures to improve operational efficiency, which remain top priorities for the Union Budget 2025.

Experts believe the upcoming budget holds promise for advancing these goals. They anticipate industry recognition alongside tax incentives and policy changes aimed at bolstering homebuyer confidence and driving growth.

Union Finance Minister Nirmala Sitharaman is set to present the budget on February 1.

Anuj Puri, Chairman of ANAROCK Group, highlighted the sector's need for government intervention, particularly amid declining real estate activity in late 2024. He cited key expectations such as industry status recognition, tax reliefs, and measures to revitalize the affordable housing segment.

Pradeep Aggarwal, Chairman of Signature Global, called the industry status a transformative step with a ripple effect across over 200 allied industries. "This recognition would stimulate job creation, skill development, and economic activity, reinforcing real estate’s pivotal role in India’s economy," he said.

Sanchit Bhutani, Managing Director of Group 108, emphasized the importance of a single-window clearance system to save time and accelerate project completion. He also suggested measures to cap interest rates and introduce tax incentives under Section 80C for REIT investors to stimulate demand and supply in the sector.

Tejas Patil, Founder of Arbour Investments, stressed that industry status could streamline access to institutional finance, reduce borrowing costs, and enhance transparency.

Fiscal Measures Demanded

Developers have proposed various fiscal initiatives to boost the sector, including increasing the tax rebate on housing loan interest to ₹5 lakh, revising GST input tax credit rules, and introducing tax incentives for REIT investors under Section 80C.

G Hari Babu, National President of NAREDCO, suggested raising the income tax deduction limit on interest payments under Section 80C from ₹2 lakh to ₹5 lakh and restoring the interest subvention for loans under PMAY. He also recommended a fixed 5% interest rate for loans up to ₹25 lakh and removing the ₹10 crore cap on capital gains tax exemptions.

Aggarwal further advocated for a ₹5 lakh subsidy for housing loans up to ₹1 crore and streamlining GST rules to ease developers' tax burdens and stabilize property prices.

Ankush Kaul, President of Sales and Marketing at Central Park, called for lower home loan interest rates and increased tax deductions to boost demand. Similarly, Abhishek Tharwani, Director at Tharwani Realty, highlighted the potential benefits of reduced GST on construction materials and tax incentives for affordable housing in Tier 2 and Tier 3 cities.

Sandeep Agarwal, CFO of Elan Group, expressed optimism that the budget could introduce strategic fiscal measures to ease liquidity constraints, stimulate demand, and ensure sustainable growth.

Peush Jain, MD of Commercial Leasing at ANAROCK, recommended reforms to attract both domestic and foreign investment, including input tax credit on fit-outs and updated depreciation rates to accommodate evolving technologies and trends in office spaces.

The real estate sector remains hopeful that the Union Budget 2025 will deliver transformative changes to address longstanding challenges and unlock its full potential.