Budget
Incentives for affordable homes, industry status in realty sector's budget wish list
Summary
- The market for homes priced under ₹45 lakh has struggled post-pandemic, with demand and supply shrinking significantly
Bengaluru: Incentives to boost affordable housing and granting industry status to real estate are among key demands of the realty sector ahead of the Union Budget.
“Incentives and tax benefits for developers and buyers in the affordable and mid-segment housing categories will contribute towards the goal of ‘housing for all’," said Ashish Puravankara, managing director at real estate firm Puravankara Ltd. “The definition of affordable housing should be revised to better align with market realities and include a broader segment of homebuyers."
Once a promising sector, affordable housing—homes priced under ₹45 lakh—has struggled post-pandemic, with demand and supply shrinking significantly. Amid declining real estate activity in the second half of 2024, the sector anticipates government measures to revive overall consumption.
“The tax holiday under Section 80-IBA of the Finance Act, 2016, was a major incentive that boosted affordable housing supply," said Anuj Puri, chairman at property consultant Anarock Group. “Reintroducing this benefit could be transformative, offering substantial tax breaks to developers focused on affordable housing projects."
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One of the key expectations include industry status, which would grant access to cheaper institutional financing for the sector.
Developers seek easier access to credit and lower interest rates to ease liquidity challenges. Priority financing for affordable housing projects could help bridge the demand-supply gap.
The sector also hopes for a reduction in goods and services tax (GST) on raw materials such as cement and steel, helping lower the cost of construction costs. Reducing GST on under-construction properties would make homes more affordable and boost sales.
Further investment through schemes such as SWAMIH (Special Window for Affordable and Mid-Income Housing) to help complete stuck projects will instil confidence in buyers to make purchase decisions, said Sharad Mittal, founder and chief executive at Arnya RealEstates Fund Advisors.
The government, in the budget for 2025-26, is expected to maintain its focus on building robust infrastructure across the country. While it may not provide immediate relief to end-users, quality infrastructure remains a key driver for long-term growth of the real estate market.
