Amid shifting economic winds and urban aspirations, the real estate sector hopes that the Union Budget 2025 will bring reforms that could redefine its foundation and accelerate its ascent nation-wide. From the perspective of a lawyer practising in the real estate sector, these expectations are not just policy desires but are pressing calls for attention.

One of the key expectations from the Union Budget 2025 are tax reforms which also happen to be the lifeline that homebuyers and developers pin their hopes upon. Currently, homebuyers can claim an exemption of up to Rs. 2 lakh per annum on home loan interest under Section 24(b) of the Income Tax Act, 1961 (“the Act”). An increase in this limit to Rs. 3 lakh or more can be expected to provide significant relief to middle-class and lower middle-class families and reignite demand in the housing sector. Similarly, Section 80EEA of the Act, which offered an additional deduction of Rs. 1.5 lakh for first-time homebuyers may be revived to keep housing affordable for aspiring homeowners.

Developers too stand to benefit if tax holidays under Sections 80-IB and 80-IBA of the Act for affordable housing projects are extended. Rationalization of stamp duty and GST rates on under-construction properties can also be expected as the same could reduce costs, making homes more accessible to buyers thereby boosting overall market activity.

As can be seen from the previous budgets, affordable housing has long been a focus of the government. Under the “Housing for All” initiative, additional funding for the Pradhan Mantri Awas Yojana (PMAY) can be expected, making the dream of homeownership a reality for many. Reviving and extending the Credit Linked Subsidy Scheme (CLSS) under PMAY would further incentivize homebuyers falling in the lower income groups.

On the rental housing front, policies aimed at creating affordable rental housing may be expected to help bridge the housing gap in urban areas. This would help in addressing the housing shortages and give access to affordable accommodation to many residents.

Further, the long-standing demand of granting infrastructure status to the real estate sector might be addressed. This move would enable developers to access funds at lower interest rates, attracting more investments and reducing project costs. Additionally, owing to the rising awareness of a sustainable future, one may expect the Union Budget 2025 to prioritize green initiatives by incentivizing sustainable building practices and aligning the real estate sector with renewable energy goals.

One may also expect the upcoming budget to also emphasize infrastructure development in tier-2 and tier-3 cities, which are emerging as new growth hubs. Increased funding for roads, transport, and urban amenities in these regions would not only boost the real estate sector but also drive regional development.

The real estate sector’s potential often gets bogged down by regulatory complexities. Streamlining these processes is essential to reduce project delays and provide transparency. Simplified norms for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) could attract more investors, while revisions to long term capital gains (LTCG) tax rates and restoration of indexation benefits would make real estate a more attractive investment option.

The contribution of the real estate sector to GDP is significant, and attracting foreign direct investment (FDI) is crucial for its sustained growth. Simplifying regulatory frameworks and offering specific incentives could make Indian real estate sector more appealing to global investors. For Non-Resident Indians (NRIs), measures like streamlined repatriation processes and reduced tax burdens on property transactions could further enhance investment inflows.

The real estate sector today isn’t just about affordable housing and infrastructure, it’s about shaping the aspirations of a nation. With the Union Budget 2025 around the corner, the industry hopes for reforms that balance careful budgeting with growth-oriented objectives.