#FiscalPolicy (Government's approach)

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Budget 2025: A Game Changer for Indian Real Estate? Key Expectations & Market Impact

Will This Budget Unlock Growth, Affordability, and Investment in Real Estate?

As India gears up for Union Budget 2025, the real estate sector is on high alert, anticipating policy shifts that could redefine housing affordability, taxation benefits, and infrastructure expansion. With the industry contributing nearly 7% to the GDP and projected to reach $1 trillion by 2030, real estate stakeholders—homebuyers, investors, and developers—are eyeing reforms that can boost demand, streamline regulations, and fuel long-term growth.

From tax breaks for homebuyers to incentives for green real estate, this year’s budget could be a make-or-break moment for the property market. Here’s what the industry is hoping for:

1. Affordable Housing: Bigger Incentives, Bigger Opportunities

One of the biggest expectations from Budget 2025 is an aggressive push for affordable housing, a segment that remains a key government priority. With the Pradhan Mantri Awas Yojana (PMAY) in full swing, developers and buyers alike are looking for:

✅ Extension of PMAY Benefits – Increased funding and subsidies for first-time homebuyers under Credit Linked Subsidy Scheme (CLSS). ✅ Higher Tax Deductions – Raising the Section 80EEA benefit (currently ₹1.5 lakh) to ₹2.5 lakh to help middle-income buyers. ✅ Lower GST on Under-Construction Properties – Reducing the current 5% GST (without ITC) to 3% or reinstating input tax credit (ITC) for builders to cut costs.

These moves could enhance affordability, improve sales volumes, and strengthen India’s housing demand.

2. Tax Benefits: More Savings for Homebuyers & Developers

Industry players have long demanded higher tax exemptions to boost liquidity and sales. Key tax-related expectations from Budget 2025 include:

📌 Increase in Home Loan Interest Deduction – Raising the Section 24(b) limit from ₹2 lakh to ₹5 lakh can make home loans more attractive. 📌 Relaxation in Capital Gains Tax – Expanding Section 54 exemptions to encourage reinvestment in real estate. 📌 GST Input Tax Credit (ITC) for Developers – Allowing builders to claim ITC can reduce project costs and make homes more affordable.

A well-balanced tax regime could encourage new home purchases, attract more investors, and drive fresh capital into the sector.

3. Infrastructure & Urban Expansion: Driving Real Estate Growth

Real estate thrives on strong infrastructure, and this budget is expected to boost metro expansions, smart city projects, and expressway networks. Experts are calling for:

🏗️ More Funding for Smart Cities & Urban Development – Expanding beyond metros to Tier 2 & Tier 3 cities. 🚆 Increased Connectivity Through Highways & Metro Rail – Unlocking new investment zones for real estate growth. 🏢 SEZ Reforms & Commercial Hubs – Making it easier to develop and sell properties in Special Economic Zones.

With India’s urbanization rate growing at 2.3% annually, these measures could expand real estate demand beyond metro cities.

4. REITs, Co-Living & Rental Housing: Unlocking the Next Big Market

The rental housing sector and Real Estate Investment Trusts (REITs) are emerging as game-changers, and Budget 2025 could further boost these markets with:

💼 Tax Incentives for REIT Investors – Offering capital gains tax exemptions or tax-free dividends to increase retail participation. 🏘️ Rental Housing & Co-Living Support – Special incentives for rental housing projects, student housing, and senior living. 📊 New Rental Housing Policy – Making it easier for private players to set up and manage large-scale rental properties.

With millennials and Gen Z preferring rental options, a structured rental housing framework could increase affordability and expand investment opportunities.

5. Stamp Duty & Registration Charges: A Much-Needed Rationalization

One of the biggest roadblocks in real estate transactions is high stamp duty and registration charges, which vary across states. The sector is hoping for:

📉 Reduction in Stamp Duty for First-Time Buyers – A centralized reduction policy to increase home sales. 🏡 Tax Deduction on Stamp Duty Costs – Making stamp duty partially deductible under income tax laws to improve affordability.

These measures could significantly lower property acquisition costs and encourage more real estate transactions.

6. Green Real Estate & Sustainable Development

Sustainability is the future, and Budget 2025 is expected to encourage eco-friendly real estate practices by:

🌱 Tax Benefits for Green Buildings – Reduced GST and subsidies for energy-efficient and sustainable real estate projects. ⚡ Incentives for Solar & Renewable Energy in Housing – Subsidies for solar power, rainwater harvesting, and energy-efficient homes. 🏗️ Higher Floor Space Index (FSI) for Green Certified Projects – Allowing eco-friendly buildings to have higher permissible construction limits.

With climate change concerns rising, incentivizing green real estate can attract global investors and ensure long-term sustainability.

Final Thoughts: Will Budget 2025 Be a Game Changer?

The Union Budget 2025 has the potential to revolutionize the real estate sector by focusing on affordability, infrastructure expansion, taxation benefits, and sustainable development.

For homebuyers, tax relaxations and lower interest rates could make homeownership easier. For developers, GST simplifications and incentives could reduce costs and increase profitability. For investors, REIT incentives and rental housing policies could unlock new income streams.

A progressive and real-estate-friendly budget could fuel industry growth, attract foreign investments, and make housing more accessible for millions of Indians. All eyes are now on the finance ministry—will Budget 2025 deliver the much-needed boost? Only time will tell. 🚀