Key Budget Highlights Impacting Real Estate

• Zero Income Tax Up to ₹12 Lakh: This move is expected to boost disposable income and increase housing demand, particularly in the affordable and mid-income segments.
• ₹1 Lakh Crore Urban Challenge Fund: Aims to transform cities into economic hubs, supporting infrastructure and real estate growth in Tier 1 & Tier 2 cities.
• ₹15,000 Crore SWAMIH Fund 2.0: Expected to revive 1 lakh stalled housing units, benefiting homebuyers and developers facing liquidity constraints.
• TDS on Rental Income Increased: Raising the TDS limit on rent from ₹2.40 lakh to ₹6 lakh will ease compliance burdens and improve rental housing investments.
• Tax Exemption on Two Self-Occupied Properties: Homeowners can now claim tax benefits on two properties instead of one, reducing tax burdens and promoting real estate investments.
• Expansion of GCCs in Tier-2 Cities: Will drive commercial real estate demand in emerging cities, boosting office space and warehousing needs.
• Digitization of Land Records: Expected to enhance transparency and efficiency in real estate transactions, boosting homebuyer confidence.

Industry Reactions

Dr. Niranjan Hiranandani, Chairman, NAREDCO & Hiranandani Group

The budget strengthens infrastructure investment and real estate demand, with the SWAMIH Fund 2.0 ensuring the completion of stalled projects. However, inadequate long-term investment and the absence of affordable housing incentives remain concerns.

Domnic Romell, President, CREDAI-MCHI

The increase in income tax exemption and rental TDS limits will benefit middle-class homebuyers and landlords. The SWAMIH Fund’s expansion is a welcome move, but further policy reforms, including GST rationalization, are needed to unlock the sector’s full potential.

Prashant Sharma, President, NAREDCO Maharashtra

While tax relief and urban development initiatives are positive steps, the budget lacks direct incentives like industry status and single-window clearances that could have accelerated real estate growth.

Badal Yagnik, CEO, Colliers India

The budget furthers the vision of ‘Viksit Bharat’ with reforms in urban development, taxation, and regulatory frameworks. The SWAMIH Fund extension and Urban Challenge Fund will accelerate real estate growth, while rationalized taxes will spur investments in residential real estate and REITs.

Shrinivas Rao, CEO, Vestian

The budget’s focus on employment generation, infrastructure, and increased disposable income will drive demand across all real estate segments. Additionally, the SWAMIH Fund and digitization of land records will strengthen homebuyer confidence. Infrastructure upgrades, particularly in air cargo, will fuel warehousing demand nationwide.

Piyush Bothra, Co-Founder & CFO, Square Yards

The zero-tax provision up to ₹12 lakh will boost homebuyers’ purchasing power. The ₹15,000 crore SWAMIH Fund is a crucial intervention for stalled projects, but increased home loan deductions could have further enhanced affordability and eased credit constraints.

Rohan Khatau, Director, CCI Projects

Infrastructure spending and PPP initiatives are welcome, but key reforms such as stamp duty rationalization and higher home loan interest deductions were expected. The sector may require mid-year policy interventions.

Vikas Sutaria, Founder, Irah Lifespace

The budget lacks incentives for NRI and HNI investments in luxury real estate. While TDS rationalization helps, easing investment norms for these segments could have further boosted the sector.

Shraddha Kedia-Agarwal, Director, Transcon Developers

The Urban Challenge Fund and infrastructure-focused projects will drive growth, but the real estate sector still needs tax rebates and industry status for sustained expansion.

Samyak Jain, Director, Siddha Group

The revamped tax structure and middle-class benefits will increase disposable income, empowering homebuyers and fueling sectoral growth.

Abhishek Jain, COO, Satellite Developers

The budget’s emphasis on urban development and tax relief is positive, but liquidity issues, taxation burdens, and policy hurdles remain. A more comprehensive real estate policy is required.

Manju Yagnik, Vice Chairperson, Nahar Group & Senior VP, NAREDCO Maharashtra

The budget strengthens economic resilience with its focus on infrastructure. However, a targeted housing policy and tax incentives would have further fueled real estate growth.

Rajiv Agrawal, Co-Founder, Saarathi Realtors

The tax relief and SWAMIH Fund 2.0 will make homeownership more accessible, unlocking new investment opportunities in real estate.

Anuj Puri, Chairman, ANAROCK Group

The budget focuses on economic growth, consumption, and infrastructure but lacks major announcements for affordable housing, leaving stakeholders hoping for mid-year interventions.

Conclusion

The Union Budget 2025-26 introduces significant tax relief and urban development initiatives, indirectly benefiting the real estate sector. However, industry experts believe the absence of direct incentives—such as higher home loan deductions, single-window clearances, and GST rationalization—limits the sector’s full growth potential. While the middle class gains from tax relief, developers and investors look forward to further structural reforms to sustain long-term real estate momentum.

Also Read: budget expectations for real estate

The post Budget 2025: Tax Relief on Two Homes, ₹15,000 Cr SWAMIH Fund & Urban Growth Push Real Estate Forward appeared first on Square Feat India.

India’s luxury housing sector has witnessed remarkable growth in recent years, driven by rising demand from high-net-worth individuals (HNIs) and Non-Resident Indians (NRIs). In 2024, luxury housing accounted for 16% of total housing sales, a significant jump from 6% in 2019. The sector’s overall market size was valued at approximately ₹3.89 trillion in 2024 and is projected to reach ₹9.09 trillion by 2030, reflecting a compound annual growth rate (CAGR) of 15%. This growth has been primarily fueled by the premium and luxury housing segment, underscoring the sector’s vast potential over the next five years.

With the upcoming Budget 2025, there is significant anticipation regarding how the government will continue fostering this momentum and attracting greater foreign investment. The budget is expected to introduce policies that enhance the ease of doing business for international investors, making India’s luxury housing market more vibrant than ever. Below are the key expected reforms and their potential impact on foreign investments in the sector.

A. Streamlining Foreign Direct Investment (FDI) Regulations

The government has taken proactive steps to simplify FDI regulations, making India’s luxury housing market more accessible to international investors. These measures aim to boost foreign capital inflows into the real estate sector.

1. Simplified Approval Processes

• The establishment of a one-stop digital platform for real estate approvals will significantly reduce delays in new project launches, enhancing investor confidence.
• A transparent and standardized approval process is expected to attract more global funds, particularly in the luxury residential segment, where international investors show keen interest.

B. Clearer Guidelines & Tax Relief for Foreign Investors

• The introduction of clearer property ownership guidelines under the Foreign Exchange Management Act (FEMA) will provide foreign investors with more security, encouraging long-term investments in India’s premium property market.
• Tax relief initiatives for foreign real estate firms could further stimulate investments, particularly in prime cities like Mumbai, Delhi, and Bengaluru, where luxury housing demand is at its peak.

C. Tax Incentives for Foreign Investors

Tax incentives play a crucial role in attracting foreign investment into the luxury housing sector. The following reforms could make India’s high-end real estate market even more competitive on a global scale:

• Revised GST structure for under-construction luxury properties: Adjusting the current Goods and Services Tax (GST) rate could enhance affordability and encourage greater foreign investor participation.
• Reinstating input tax credits for developers: This could lower construction costs, increasing profitability and making luxury housing projects more attractive to international investors.

D. Reforms in Real Estate Investment Trusts (REITs)

• Changes to the dividend distribution tax structure for REITs could enhance their appeal to foreign investors. A more tax-efficient REIT framework would drive global capital inflows, particularly into high-value luxury projects.
• Granting “industry status” to the real estate sector would facilitate affordable financing for developers, further boosting foreign investor participation in luxury residential and commercial spaces.

Conclusion

As we approach Budget 2025, India’s luxury housing sector is poised for transformational growth. The government’s focus on streamlining FDI regulations, tax incentives, and ease of doing business will create a more investor-friendly environment. With reforms that reduce entry barriers and costs, India’s luxury real estate market is likely to witness increased foreign capital inflows, leading to greater expansion and higher investment returns.

For developers, homebuyers, and investors alike, the enhanced focus on luxury housing presents exciting opportunities. If these anticipated policy changes are implemented, India could solidify its position as a global hotspot for luxury real estate investments in the years ahead.

Also Read: Repo Rate Unchanged – Housing Set for Festive Season

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