Budget 2025: Realty Developers Urge Affordable Housing Push, Tax Reforms
Indian real estate developers have sought the government to review affordable housing thresholds, tax structures, and loan benefits in the upcoming Union Budget 2025-26. They look forward to facilitating homebuyers and incentivizing developers to offer more affordable housing projects that are aligned with the government's 'Housing for All' scheme.
The Confederation of Real Estate Developers' Associations of India has proposed a host of measures aimed at key issues in the real estate sector. It specifically touched upon affordable housing. The industry body said housing prices have surged over 50% since 2017 and urged the government to revise the current Rs 45-lakh price cap for affordable housing projects.
With its significant contribution to GDP, employment generation, and infrastructure, the Indian real estate sector has always been a pillar of national development. Influencing around 53% of the country's GDP and providing jobs to over 8 crore people, the sector holds the potential to address the housing needs of 40 crore Indians who lack proper shelter," said Boman Irani, president of CREDAI.
Housing prices have risen 38% since June 2018, according to the National Housing Bank. With realities of the market, developers have suggested that the carpet area criteria for affordable housing in metro cities be reformed from the existing 60 sq meter to 70 sq meter while retaining the 90 sq meter limit for tier-1 and other cities with unit prices delinked from the definition. These changes are expected to incentivize developers to prioritize affordable housing and improve accessibility for middle- and low-income families.
Affordable housing supply in major cities has dipped from 26% in 2021 to a mere 17% in 2024. Industry data predicts a shortage of 31.2 million units by 2030. In this context, CREDAI has recommended extending the lower 15% corporate tax rate currently applicable to manufacturing companies—to affordable housing projects. According to the organization, this would bridge the supply gap in the critical affordable housing segment.
Irani stated that the recommendations of CREDAI, aimed at providing 7 crore homes in the next seven years and generating 2 crore new jobs, are made to unlock the true potential of the sector. He expressed confidence that these reforms would catalyse growth, empower homebuyers, and align with India's broader economic ambitions.
For homebuyers, CREDAI has suggested an increase in the interest deduction limit on housing loans under Section 24(b) of the Income Tax Act to Rs 5 lakh from Rs 2 lakh and extend this benefit to the new tax regime. The association believes that this will have a very positive effect on homebuyer sentiment and therefore stimulate demand for residential real estate.
CREDAI also proposed introducing a Credit Guarantee Scheme for housing loans to support financial inclusion in the housing sector. The scheme would cover up to Rs 70 lakh home loans and home improvement loans up to Rs 30 lakh, thereby reducing lenders' risks and reducing dependency on high-cost private financing.
The government has also been requested by developers to increase the deduction limit of Section 80C for the repayment of principal of housing loans. They have also proposed a separate deduction of up to Rs 5 lakh for the first self-occupied home to promote investment in real estate.
CREDAI expects these reforms would not only help make housing affordable for more but would also contribute positively to growth within the sector that would help lift the larger economy. It's hopeful these would usher in an inclusive and sustainable housing market for India.
