Real estate sector awaits policy overhaul, tax exemptions and source of funding as booster

Noida, January 27, 2026: Ahead of the Union Budget, the real estate sector is once again looking to the government for policy priorities. Amid rising construction costs, high interest rates, stalled projects, complex insolvency and strict regulatory processes over the past few years, the sector hopes the Budget will stimulate demand while addressing the challenges faced by developers in terms of funding and project delivery. Issues such as affordable and mid-income housing, tax incentives on home loans, easier credit access, and single-window approvals are considered key priorities on this year’s budget agenda.

According to industry experts, the growth of the real estate sector is directly linked to interest rates, tax structures and infrastructure investment. While the recent reduction in the repo rate has raised hopes of cheaper loans, the existing limit of INR 2 lakh under Section 24(b) of the Income Tax Act on home loan interest and the current cap under Section 80C offer limited relief to homebuyers.

Furthermore, pending dues to development authorities in several states, capital locked up in stalled projects, high taxes on construction materials, and a multi-layered approval system are impacting both project costs and timelines. The industry believes that if the budget grants industry status to real estate, provides single-window clearances, offers input tax credit, and outlines a clear policy for affordable housing, it will boost investment, employment and housing demand.

With just days to go, here’s what the top guns are saying.

Dinesh Gupta, President of CREDAI West UP – “Affordable and mid-income housing are the two sectors with higher expectation from Union Budget. There is a need to increase the tax exemption limit on home loan interest, provide relief under Sections 80C and 24(B) of the Income Tax Act, and create an easy and affordable funding mechanism for stalled projects. Few concrete steps like recognition of industry, a clear policy on infrastructure status and resolving the pending dues of development authorities on projects would improve the investment climate and also give a significant boost to the real estate sector.”

Shailendra Sharma, Chairman, Renox Group – “The Union Budget should prioritise tax and EMI incentives for promoters and homebuyers respectively, the steady backbone of the real estate sector. Simplification of taxes, clear regulations, and long-pending demands such as industry status, single-window clearance, and input tax credit can significantly boost project development across the categories. Since infrastructure and real estate grow hand in hand, focused investment in industry, employment opportunities and growth of social and urban infrastructure are essential to accelerate sustainable growth of real estate sector.”

Suresh Garg, CMD, Nirala World – “Like every year, we have some expectations from the Budget this year too. We hope the government grants the real estate sector the status of an industry. Additionally, we hope that the government increases the limit of home loan interest deduction from the current 2 to at least 5 lakh. A 100 per cent deduction would be even better. Apart from these, we have no other expectations from the Budget.”

Lt. Col. Ashwani Nagpal (Retd.), COO, Diligent Builders Pvt. Ltd. – “The Budget should introduce higher incentives for first-time homebuyers and a clear policy push to encourage development of affordable and premium housing across the country. While a repo rate cut can support affordability, a dedicated national framework for housing development would create far greater impact. Broad policies are essential to rehabilitate the stalled projects for promoters followed by facilities of loan restructuring, easy funding and incentive on interest rate will motivate buyers. Return of input tax credit, development-linked subsidies, single and time-bound project clearances will give real boost.”

Himanshu Garg, Director of RG Group – “The recent reduction in the repo rate has created a positive sentiment in the market and given a new impetus to the real estate sector. The upcoming Union Budget is expected to further strengthen this momentum. If the budget focuses on promoting affordable housing, increasing the limit for interest rate deductions on home loans, and investing in infrastructure, it will boost buyer’s demand. Furthermore, measures such as granting industry status to real estate and implementing a single-window clearance system will further strengthen investor confidence. Overall, the budget is expected to be positive for the sector.”

Atul Vikram Singh, Founder, Vision Business Park – “The real estate sector needs policy stability and a long-term perspective. A simplified tax structure for commercial and mixed-use projects, promotion of REITs, and digital single-window clearances will boost both investment and employment.”