With the Union Budget 2026 around the corner, the real estate sector is seeking fiscal support to revive affordable housing, while urging the government to revisit definitions framed nearly a decade ago. Realtors’ apex body, the Confederation of Real Estate Developers’ Associations of India (CREDAI), which represents more than 15,000 developers, has called on the government to extend tax incentives in the upcoming Budget to encourage developers to build affordable housing projects amid rising demand.

“India’s real estate sector is looking to the Union Budget for urgent policy support, especially for affordable housing, as rising costs and outdated definitions have made home ownership increasingly difficult for lower-income buyers,” said G. Ram Reddy, President-Elect, Confederation of Real Estate Developers’ Associations of India (CREDAI).

In an exclusive interaction with Fortune India on the sidelines of the CREDAI National Conclave in Delhi on Friday, Reddy said the industry has been engaging with the government on the need to revisit the definition of affordable housing, which was fixed in 2017 with a price cap of ₹45 lakh. “That cap may have been relevant eight years ago, but with sustained inflation and sharply higher construction costs, ₹45 lakh cannot be considered affordable today,” he said.

Reddy said CREDAI has proposed that the price threshold be raised to ₹80–90 lakh, factoring in compounded inflation. Alternatively, he said, the size criteria for affordable homes could be expanded, with the current limits of 60 square metres in metros and 90 square metres in non-metro cities revised upwards. “Owning a home has become a major challenge for small-income households. Construction costs have gone up, land prices have risen, and there are hardly any concessions left,” he said.

He said the sector is also seeking incentives to improve the viability of affordable housing projects, particularly through tax relief. Construction contracts currently attract 18% GST, which developers believe should be reduced to at least 12%, or ideally 5%, to ease the burden on homebuyers. “Any reduction in GST will directly be passed on to buyers,” Reddy said.

Reddy also highlighted the wide variation in stamp duty and registration charges across states, which he said adds significantly to the cost of affordable homes. “In Telangana, registration charges are around 7.5%, while in some cities they go up to 12%. This becomes a very big burden for affordable homebuyers,” he said, adding that both the Centre and states need to align incentives to encourage this segment.

He said CREDAI has raised these issues with the finance ministry, the housing ministry and NITI Aayog, stressing that affordable housing requires a clear national vision. “If the Government of India gives direction, states will follow. Stamp duty and registration charges for affordable housing need to be reduced for the segment to succeed,” he said.

On the outlook for housing demand, Reddy remained optimistic, citing urbanisation and population growth. “Land is limited, population is growing, and housing demand will always be there,” he said. Demand, he added, has been growing at around 10% year on year and could accelerate to 12–13% over the next two to three years.

Echoing this view, CREDAI National President Shekhar Patel said the association is hopeful of positive announcements in Union Budget 2026 that could help augment the supply of affordable housing.

CREDAI National Secretary Gaurav Gupta said consumers would benefit if the price cap for affordable housing is raised, noting that such homes attract a GST rate of just 1%. He added that to further boost supply, the GST on developers’ work contracts should be reduced to 12% from the current 18%, which would help lower apartment prices.

Gupta also urged the government to consider tax incentives for real estate companies developing affordable housing projects, pointing out that similar incentives had been provided in the past to support the segment.