Budget 2025: Real estate sector pushes for GST cuts, tax relief

After a positive momentum in the year 2024, when real estate companies saw housing sales value surge by 16% to ₹5.68 lakh crore in 2024, they are hopeful of a strong growth this year as well. As Budget 2025 comes closer, the industry stakeholders' wishlist is ready and they hope Finance Minister Nirmala Sitharaman will announce key measures that will spur the broader growth of the real estate sector and address their diverse needs.

Among various demands, the real estate sector is primarily seeking reduced GST on luxury housing, higher tax deductions for home loan interest, streamlined GST for under-construction properties, subsidies for green building projects, and simplified approval processes.

Manish Jaiswal, Group COO of Eldeco Group, a Noida-based developer, says the increasing demand for housing across segments, from affordable to premium, underscores the importance of supportive policies. "These include favourable GST policy for input credit, tax incentives and reduced stamp duties for homebuyers, along with initiatives to boost FDI inflows in real estate."

He also says that infrastructure development and enhanced connectivity in urban and emerging regions can significantly uplift housing projects across categories. "We urge the government to create a comprehensive ecosystem that caters to the varying needs of the market and fosters inclusive growth in the real estate sector, contributing to overall economic development and urban prosperity."

India's real estate market is expected to reach $1 trillion by 2030. Since the luxury segment has seen significant growth over the years in India, it's important to encourage the buyers to participate more by initiating favourable policies, feels Yateesh Wahaal, Director M3M India, a Gurugram-based developer. In Budget 2025, he remains optimistic about reforms that will enhance the real estate sector's growth trajectory. "To further boost growth, we recommend that the government consider reducing GST on luxury housing from 12% to 8%." He says the commercial real estate would benefit from policies promoting co-working spaces and Grade A office infrastructure.

Wahaal also says that tax relief and streamlined GST for under-construction properties will make real estate investments more attractive. "Sustainability incentives for green projects are crucial to align with global trends. These measures will fuel growth, attract investment, and solidify India’s position as a leader in real estate innovation and development."

Aman Sharma, MD of Aarize Group vouches for policies that could accelerate growth across key segments. "For commercial real estate (CRE), we expect incentives and simplified regulations to attract global investors and strengthen India’s economic trajectory."

He says the luxury housing market, driven by evolving lifestyles and aspirations, would benefit from measures like reduced stamp duties and enhanced tax reliefs. "Tier-2 cities, with their growing potential, require a strategic focus on infrastructure and industrial development to unlock new opportunities for developers and investors," says the Aarize Group MD.

Real estate players feel the FM should announce measures for both developers as well as prospective buyers. Recognition of real estate as an industry would unlock access to lower-cost funding, simplify approval processes, and attract substantial domestic and foreign investments, they add.

Laying out in detail the pressing demands of the industry, Rajat Khandelwal, Group CEO of Mumbai-based Tribeca Developers, says there's a need to encourage individuals to invest in residential properties, with the introduction of additional tax benefits for first-time homebuyers. "Easing the GST burden on developers will help stabilise property prices. Reviving the Credit Linked Subsidy Scheme (CLSS) for first-time home buyers could significantly boost the housing segment. The luxury real estate segment has shown immense potential, but a balanced revision in capital gains taxation can create liquidity across all market segments. This would benefit homeowners, investors, and developers alike. The tax deduction on home loan interest under Section 24(b) of the Income-Tax (I-T) Act should be increased from ₹2 lakh to ₹5 lakh."

He wants the government to announce tax benefits or subsidies for adopting green building technologies and renewable energy solutions, which will encourage developers to contribute to India’s climate goals. "Increasing investments in urban infrastructure, such as roads, public transport, and smart city initiatives, will not only make cities more livable but also enhance property values."

There is also a push for infrastructure growth in Tier-II cities and relaxed FDI norms. Sudeep Bhatt, Director of Strategy at Gurugram-based Whiteland Corporation says this year's budget can catalyze the real estate sector’s potential. "The industry seeks better tax benefits for homebuyers, particularly a higher deduction limit for home loan interest to boost housing demand. The rationalisation of GST rates for under-construction properties and incentives for green and sustainable real estate projects are also anticipated. Additionally, policies to enhance liquidity for developers, promote ease of doing business and incorporate private and foreign investments through relaxed FDI norms are crucial."

For Yashank Wason, MD of Gurugram-based Royal Green Realty, the impending budget offers a critical chance to support the real estate industry, especially in Tier-II cities, which are becoming economic development engines. "To draw investments and spur urbanisation in cities like Indore, Bahadurgarh, Sonipat and others, we want policies that support different housing segments, infrastructure growth, and improved connectivity. Simplified single-window clearance procedures are necessary to cut down on project delays and related expenses."

Notably, the outlook for 2025 remains optimistic, with over 3.6 lakh units expected to be delivered across major Indian cities, as per the latest data shared by real estate platform Square Yards. Top listed developers are estimatedly working towards completing an ambitious pipeline of around 300 million sq. ft. for FY2025. The strong pipeline is expected to boost transaction volumes and cater to diverse buyer preferences.