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.”

Shivam, VP – Strategic Growth, Sattva Group – Residential Real Estate: “The residential sector has benefitted from the government’s sustained focus on urban infrastructure, housing delivery and regulatory reforms over recent years. This has helped build confidence around modern, organized urban living. Going ahead, continued policy support through faster and more transparent approvals, rationalization of taxes and incentives, and infrastructure-led urban development will be important to sustain momentum. Consistency and continuity in these areas will further strengthen housing affordability and long-term demand across cities.”

Commercial Real Estate: “India’s emergence as a global hub for GCCs has been strongly supported by policy reforms, infrastructure investment and ease of doing business initiatives. As global companies deepen their presence in India, the next phase of growth will benefit from measures that enable scale with greater speed and certainty. Support for well-planned office and mixed-use clusters, single window clearances, infrastructure status for large developments and better coordination between central and state policies can further enhance India’s competitiveness and reinforce long term investor confidence.”

Mahesh Vishwanathan, Deputy CEO & CFO, Finolex Cables Ltd – “As the industry looks toward India’s Budget 2026, the wire and cable sector expects the government to deploy multiple growth-enabling levers to sustain momentum. A key expectation is a continued increase in capital expenditure on infrastructure development, including railways, airports, seaports, metro and urban utilities (power and communication), which directly drives demand for wires and cables. The industry also sees significant opportunity in higher spending on real estate and housing, supported by reforms in land acquisition processes and easier access to financing to create stronger consumer pull. By combining infrastructure expansion with targeted incentives for AI-led manufacturing and reinforcing the ‘Make in India’ vision, Budget 2026 can offer the stability and policy clarity needed for the manufacturing ecosystem to achieve long-term market leadership and economic resilience.”

Shashank Agarwal, Joint Managing Director, Salasar Techno Engineering Ltd – “India’s infrastructure build-out is central to unlocking productivity, improving logistics efficiency, and converting our population dividend into an economic advantage. As we look to the upcoming Union Budget, Salasar Techno Engineering Ltd. expects a continued and sustained thrust on public capex with multi-year predictability, because long-cycle infrastructure requires stable pipelines not one-time spikes in spending.

“While investments in railways, airports and ports are important, the next phase must prioritise roads and urban mobility at scale: decongesting cities, improving traffic flow, building stronger inter-city corridors, and ensuring last-mile connectivity. Faster and safer movement of people and goods is the most direct lever to raise national efficiency and reduce logistics costs.

“We also expect ongoing support for power infrastructure, particularly transmission and distribution upgrades, grid resilience, and renewable integration—along with measures that improve execution: streamlined approvals, quicker dispute resolution, standardised contract frameworks, and timely release of payments to keep the sector’s working capital healthy.

“On telecom and digital infrastructure, recent clarity in public tenders has been helpful. However, we believe the sector now needs clearer visibility on private-side expansion and enabling policies that strengthen competitiveness. A healthier competitive landscape across telecom services as well as tower infrastructure—will support innovation, resilience and affordability for consumers. Simplifying Right-of-Way, accelerating fibre densification, and ensuring faster rollouts in both urban and rural India should remain key priorities.
“Overall, we look to the Budget for a practical, execution-focused roadmap that keeps India’s infrastructure growth on a high trajectory for several years to come.”

Sumit Bidani, CEO, Knauf India – “While the continued focus on infrastructure is welcome, the Union Budget 2026 must now look beyond ‘what’ we build to ‘how’ we build. To meet India’s urban housing and commercial demands, we need to transition from labor-heavy, resource-intensive traditional methods to modern, dry-construction technologies. We expect the government to incentivize circularity in construction – specifically rewarding the use of recyclable materials like gypsum that minimize waste and reduce the ‘embodied carbon’ of our cities. By providing fiscal support for energy-efficient building systems and prioritizing ‘Value over Lowest Cost’ in public procurement, the Budget can accelerate India’s path to a Net-Zero built environment while ensuring faster, world-class project delivery.”

Pavan Kumar, Founder & CEO, White Lotus Group – “For the Indian real estate sector, and particularly for luxury and design-led development, the Union Budget 2026 presents a timely opportunity to introduce policy depth and tax clarity that align with the market’s maturity and long-term investment horizon. Stakeholders today are looking beyond one-off incentives. What the sector truly needs is structural clarity on capital gains and taxation that recognises luxury properties as long-duration, patient capital assets rather than short-term speculative instruments.

“Simplifying long-term capital gains provisions and incentivising extended holding periods will help stabilise pricing, attract sophisticated global capital, and reinforce real estate’s role in generational wealth creation.

“GST treatment around input tax credits and works contracts continues to be a key cost driver, particularly for high-end projects that prioritise bespoke materials and sustainability standards. A more predictable and transparent GST framework will not only improve cost efficiency but also enhance pricing clarity for discerning homebuyers.

“Complementary measures such as supporting institutional platforms like REITs and fine-tuning policy levers across the housing spectrum can help position real estate as core economic infrastructure and a long-term value engine for the country.”

Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd – “As we approach the Union Budget 2026, the real estate sector remains optimistic, with expectations focused on sustained policy support to improve housing affordability, ease liquidity constraints, and maintain long-term growth momentum. Continued government interventions through fiscal incentives, financing support, and demand-stimulating measures will be critical in strengthening end-user confidence and ensuring the sector’s steady contribution to the broader economic recovery.

“The real estate sector currently contributes around 7 per cent to India’s GDP and supports over 200 allied industries. Granting industry status would improve access to institutional funding, reduce borrowing costs, and enhance transparency, enabling the sector to play a stronger role in job creation and economic growth. According to industry reports, real estate has the potential to contribute up to 15 per cent to India’s GDP by 2047, making it a key driver in achieving the vision of a ‘Viksit Bharat’ by 2047.

“The extension and reintroduction of the Credit Linked Subsidy Scheme (CLSS) could provide meaningful relief to aspiring homebuyers, especially first-time buyers, while stimulating demand across various housing segments. Such measures would further strengthen buyer confidence and reinforce the sector’s role as a key contributor to economic growth.

“Expanding the definition of affordable housing to include homes priced up to INR 1 crore would better reflect current market realities and reinforce the government’s ‘Housing for All’ vision. If implemented, such reforms could unlock significant growth potential, support sustainable development, and enable the sector to make a stronger contribution to the country’s broader economic goals.”