Budget 2026 Expectations: Real Estate Industry Calls For Tax Relief, Stable Policies

The Real Estate Industry is strongly pushing for a huge rationalisation of taxes, an individualised treatment of the industry, & a significant increase in home loan interest deduction limits prior to the 2026-2027 Union Budget, News18 reported.

Industry Stakeholders are requesting the Ministry of Finance raise the tax deduction cap on Home Loan Interest payments made in compliance with Section 24(b) of the Income Tax Act from ₹200,000 to ₹500,000 to aid home buyers and maintain demand in the Housing Industry due to rapid increases in both Property Prices and Interest Rates.

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Revision of Affordable Housing Definition

Another key demand from within the Real Estate Sector from the Union Budget 2026, as noted by News18 is for the definition of affordable housing to be redefined in relation to current market levels. The existing ₹450,000 price limit for affordable housing is now considered outdated and not applicable in areas such as Mumbai, Delhi-NCR, and Bengaluru, and the Industry proposes that the new price cap for Affordable Housing should be raised to ₹750,000 - ₹800,000. This will enable more projects to be eligible for tax benefits and ultimately increase supply to mid income households.

Single Window Clearance and Industry Status 

Delays in the issuing process are a major impediment for developers. According to an article by News18, the industry is in favour of having a single-window clearance system established. The single-window mechanism will shorten the time it takes to approve projects, reduce construction costs, and eliminate construction delays for many developers.
In addition to this, the real estate industry has consistently sought to establish “industry status” for their industry category, whereby developers could borrow money from lenders at a lower interest rate, resulting in lower overall capital costs for developers, which ultimately would reduce prices for end-users as well as provide developers with better financial viability.

Driving Costs Down Through GST Rationalisation

As input costs continue to impact the margins of the construction industry, many developers have expressed their desire for a reduction in GST on essential construction materials such as cement and steel. They hope that by reducing GST, overall construction costs will come down, thus making it easier for consumers to purchase homes. Besides lowering GST on building products, there has been an ongoing call for ITC for developers. This tax credit had previously been available to developers under the GST regime; however, the new GST framework has eliminated ITC for residential developers.'

New Incentives for Rental Housing, REITs

In response to the need for housing in urban areas, the construction industry is advocating for new incentives related to rental housing development. Developers are also looking for further liberalisation of the REIT norms to invite additional retail and institutional capital into commercial and residential property, as per the news report. 

Support for Liquidity & Funding 

The lack of liquidity continues to be an obstacle to stalled projects. As such, the industry expects the government will expand the scope of the SWAMIH (Special Window for Affordable and Mid-Income Housing) Investment Fund. An increase in the corpus - and a lowering of the eligibility requirements for that fund - will be required to unlock stalled projects and provide housing to those waiting to purchase it.