Budget 2025: Real Estate Sector Seeks GST Reforms and Tax Incentives for Growth

Budget 2025: Real Estate Stakeholders Push for GST Reforms and Tax Incentives to Spur Growth

With the much-anticipated Union Budget 2025 on the horizon, real estate stakeholders are voicing their expectations for key reforms that could significantly boost growth in the housing sector. As Finance Minister Nirmala Sitharaman prepares to present the budget on February 1, 2025, industry experts are rallying for policy changes that would stimulate the real estate market, making housing more affordable and driving investment.

Vikas Garg, Joint Managing Director of Ganga Realty, has been at the forefront of advocating for rationalizing the Goods and Services Tax (GST), particularly for the luxury housing segment. He believes that streamlining GST and offering enhanced tax benefits for homebuyers could have a ripple effect on the entire market, stimulating demand across various housing categories. Garg also stressed that reducing stamp duties and providing better financing options for luxury housing could be a game-changer, potentially catalyzing a significant boost in this segment.

Echoing Garg’s sentiments, Vimalendra Singh, Chief Business Officer at Mahindra Lifespace Developers, highlighted the importance of reducing GST on essential materials like cement. He also called for the implementation of input tax credits for under-construction properties, a move he believes would help drive growth in the residential market. Singh went further to suggest increasing the home loan tax exemption limit, which would be especially beneficial to middle-income buyers who are facing rising urban housing prices.

In the affordable housing sector, Harshvardhan Neotia, Chairman of Ambuja Neotia Group, proposed a revision of income tax deductions under Section 24(b) from the current Rs 2 lakh to Rs 5 lakh. Neotia pointed out that such a move would significantly enhance affordability and promote homeownership, particularly in the slowing affordable housing market.

Additionally, experts have emphasized the need for rental housing reforms. Routhu Nagaraju, CEO of Experion Developers, suggested that a special tax dispensation for organized rental housing, student housing, and dormitories for industrial workers could attract institutional capital. This would enable large-scale development of alternative housing solutions to meet the growing demand.

Navin Makhija, Managing Director of The Wadhwa Group, advocated for the revival of the 80-IB tax benefit for developers engaged in affordable housing projects. He believes that reinstating this provision would incentivize developers to focus more on affordable housing, which aligns with the government's "Housing for All" initiative.

Sankey Prasad, Chairman & MD of Colliers Middle East & India, also emphasized the importance of strategic initiatives, including increased allocations for affordable housing and a more streamlined regulatory framework. These actions, Prasad suggested, could ignite fresh investments and meet the aspirations of millions.

Finally, Pranay Kumar, Executive Director at Rudrabhishek Enterprises, highlighted the need to extend the capital gains exemption timeline from 3 to 5 years. This extension, Kumar argues, would provide long-term investors with the necessary stability to make impactful decisions in the housing market.