Budget 2025: What the Real Estate Sector Seeks for Homebuyers

As we approach the Union Budget 2025, all eyes are on the government and its announcements that could shape the future of the Indian real estate sector. A cornerstone of India’s economy, the real estate industry contributes nearly 7% to the country’s GDP and is projected to reach $1 trillion by 2030. However, the sector has faced its share of challenges over the years, from liquidity crunches to regulatory hurdles, and more recently, the ripple effects of global economic uncertainties.

For homebuyers, the Union Budget is always a moment of anticipation—filled with hope for incentives, relief measures, and initiatives that could make homeownership more affordable and accessible. With Budget 2025 just around the corner, here’s a closer look at what the real estate sector is seeking to benefit homebuyers, and how these changes could redefine the landscape of the housing market.

1. Enhanced Tax Benefits on Home Loans

One of the biggest expectations from Budget 2025 is an increase in tax deductions on home loan interest payments. Currently, under Section 24(b) of the Income Tax Act, homebuyers can claim a deduction of up to ?2 lakh on the interest paid for a self-occupied property. While this has provided some relief, it is no longer sufficient in the face of rising property prices and loan amounts.

The real estate sector is urging the government to raise this limit to ?5 lakh, which could significantly reduce the financial burden on homebuyers. Such a move would not only incentivize more people to invest in homes but also provide a much-needed boost to housing demand in Tier 1, Tier 2, and Tier 3 cities alike.

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2. Lower GST Rates on Affordable Housing

The Goods and Services Tax (GST) has been a contentious issue for the real estate sector. While the government reduced GST rates on affordable housing to 1% and non-affordable housing to 5% without input tax credit, developers have raised concerns about the cascading effect of higher input costs.

To address this, the sector is seeking a further reduction in GST rates on under-construction properties. A lower GST rate could incentivize homebuyers to invest in ongoing projects, thereby boosting sales and reducing unsold inventory.

Additionally, redefining the definition of affordable housing—based on the property’s location rather than its price—could make more projects eligible for lower GST rates, benefiting homebuyers across various income brackets.

3. Support for First-Time Homebuyers

First-time homebuyers often face unique challenges, from saving for down payments to navigating the complexities of home loans. To support this demographic, the government introduced an additional deduction of ?1.5 lakh under Section 80EEA for interest on home loans in Budget 2019. However, this benefit was only applicable for loans sanctioned before March 31, 2022.

The real estate sector is now urging the government to reintroduce this scheme with an extended timeline, particularly for affordable housing. Such a move would encourage first-time buyers to enter the market, aligning with the government’s vision of “Housing for All.”

4. Simplified Approval Processes

Lengthy approval processes and regulatory bottlenecks have long been a pain point for developers, often resulting in project delays and increased costs—burdens that are eventually passed on to homebuyers.

In Budget 2025, the industry hopes for reforms to streamline approval processes, including the implementation of single-window clearance systems. Faster approvals could reduce project timelines and costs, translating to more affordable housing options for homebuyers.

As we await the announcements of Budget 2025, the real estate sector is hopeful for reforms that align with the aspirations of homebuyers. From enhanced tax benefits and affordable housing incentives to simplified regulatory frameworks, the measures sought by the industry have the potential to make homeownership more accessible, affordable, and sustainable.

The government’s continued focus on housing and infrastructure development will be key to ensuring that the real estate sector not only contributes to economic growth but also fulfils the dream of millions of Indians to own a home.

Budget 2025 has the power to redefine the future of real estate in India—and with it, the lives of countless homebuyers. Will this year’s budget deliver on these expectations? Only time will tell.

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