Budget Wishlist: Realty developers urge affordable housing push, tax reforms

Union Budget: Real estate developers across the country have urged the government to revise affordable housing thresholds, tax structures, and loan benefits in the upcoming Union Budget 2025-26 to support homebuyers and encourage developers to increase the supply of such projects, thereby advancing the government’s objective of ‘Housing for All.’

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The Confederation of Real Estate Developers' Associations of India (CREDAI) has proposed several measures to address the challenges in the property sector, particularly in affordable housing. Highlighting that housing prices have risen by over 50% since 2017, the developers’ body has called for a revision of the Rs 45-lakh price cap on affordable housing.


“With its immense contribution to GDP, employment generation, and infrastructure, the Indian real estate sector has always been at the forefront of nation-building. Currently influencing approximately 53% of India’s GDP, directly and indirectly and employing over 8 crore individuals, this sector holds the key to addressing the housing needs of 40 crore Indians who lack adequate homes,” said Boman Irani, president, CREDAI.

According to data from the National Housing Bank, housing prices have risen 38% since June 2018. To align with market realities, developers have suggested revising the carpet area criteria for affordable housing to 70 sq meter in metro cities from the current 60 sq meter and retain 90 sq meter in tier-1 and other cities, while delinking unit prices from the definition.

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This, according to them, would incentivize developers to prioritize affordable housing projects and make homeownership more accessible for middle- and low-income families.

Affordable housing supply in major cities dropped from 26% in 2021 to 17% in 2024, with a shortage projected to hit 31.2 million units by 2030, shows industry data.

To encourage developers to focus on affordable housing, CREDAI has proposed extending the lower 15% corporate tax rate, currently applicable to manufacturing companies, to affordable housing projects. This measure, they believe, will bridge the supply gap in this critical segment.

According to Irani, with a vision to provide 7 crore homes in the next 7 years and generate 2 crore new jobs, these recommendations aim to address long-standing challenges and unlock the sector’s true potential. He is confident these measures will catalyse growth, empower homebuyers, and support India’s economic ambitions.

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For homebuyers, CREDAI has recommended increasing the interest deduction limit on housing loans under Section 24(b) of the Income Tax Act from Rs 2 lakh to Rs 5 lakh and extending these benefits to the new tax regime. These changes are expected to significantly boost homebuyer sentiment and stimulate residential real estate demand.

To enhance financial inclusion in the housing sector, the association has proposed introducing a Credit Guarantee Scheme for housing loans. The scheme may cover loans up to Rs 70 lakh and home improvement loans up to Rs 30 lakh, reducing lenders' risks and minimizing reliance on high-cost private financing.

Developers have also urged to increase the deduction limit for principal repayment of housing loans under Section 80C. They have suggested allowing a separate deduction of up to Rs 5 lakh for the first self-occupied home to encourage investments in real estate.

These initiatives will not only make housing more affordable but also stimulate growth in the sector, benefiting the broader economy, they said.