“Budget 2025 lays the foundation for a resilient real estate sector, balancing affordability, investment, and infrastructure growth to drive long-term economic momentum.” – Mayank Agrawal
Union Budget 2025 introduces transformative measures for India’s real estate sector, focusing on tax relief, rental reforms, and infrastructure development. These reforms aim to enhance affordability, reduce compliance burdens, and revive stalled projects, creating a robust ecosystem for homebuyers and investors. Here are some of the key reforms from the budget:
Tax Reforms Boosting Affordability
No income tax on earnings up to ₹12 lakh: Individuals earning up to ₹12 lakh annually (₹12.75 lakh for salaried employees) are now exempt from income tax under the new regime. This is expected to boost disposable income, driving demand for affordable housing while enabling higher EMI savings.
<strong>A simplified tax structure: Experts believe that the revised tax regime will strengthen purchasing power while encouraging investments in the equity and real estate markets.
Rental Housing Reforms
Two self-occupied properties exempt from tax: Homebuyers can now claim a ‘nil annual value’ for two self-occupied properties, eliminating tax on notional rental income. For example, a person owning homes in both Delhi and Mumbai will save thousands annually.
Higher TDS threshold on rent: The TDS deduction threshold on rent has increased from ₹2.4 lakh to ₹6 lakh per annum. This aims to reduce compliance burdens for landlords while improving cash flow, benefiting both tenants and property owners.
SWAMIH Fund 2: Reviving Stalled Housing Projects
₹15,000 crore allocation: The SWAMIH Fund 2 (Special Window for Affordable and Mid-Income Housing) aims to complete 1 lakh stalled housing units, building on the success of the first fund, which delivered 50,000 homes.
Impact: This fund will provide relief to homebuyers stuck paying EMIs for delayed projects while also covering rental costs. An additional 40,000 units are slated for completion in FY25.
Blended finance model: The fund combines government support, private investments, and bank contributions to expedite project delivery.
Infrastructure and Urban Development
₹1 Lakh Crore Urban Challenge Fund: Designed to transform cities into growth hubs, this fund will finance 25% of urban projects (such as redevelopment and sanitation), with the remaining funding sourced from bonds, loans, and PPPs.
Expected outcome: Improved infrastructure in Tier 2/3 cities, higher property values, and enhanced livability.
Real Estate Financing Initiatives
Extended deadline for sovereign funds: Sovereign wealth and pension funds can invest in Indian infrastructure and real estate until March 2030. This will attract global capital for large-scale projects.
SWAMIH’s blended finance approach: This combines public and private investments to open liquidity and stabilize the market.
Conclusion
Budget 2025 addresses critical pain points in the real estate sector through tax relief, rental reforms, and targeted funding. By boosting disposable income & streamlining compliance Budget 2025 paves the way for sustainable growth in affordable housing and urban development. These measures are poised to benefit home buyers, investors, and developers alike, reinforcing real estate as a cornerstone of India’s economic progress.
