The National Real Estate Development Council (NAREDCO), the apex body representing real estate developers, has made a strong plea to the Central government ahead of the upcoming Union Budget. The association is advocating for two critical measures: granting industry status to the real estate sector and substantially increasing tax deductions on home loan interest. NAREDCO argues that these fiscal interventions are essential to rejuvenate the affordable housing segment and ensure sustained growth across the industry.
Key Demands for Policy Support
During a press conference held on Thursday, NAREDCO Chairman Niranjan Hiranandani emphasized that while the government has implemented several supportive policies for real estate in recent years, affordable housing still requires focused and robust policy intervention. He stressed the importance of achieving the Housing For All mission, stating that housing deserves equal priority alongside other infrastructure sectors. Hiranandani further suggested that the government should consider utilizing its own land resources to develop affordable and mid-income housing projects, which could accelerate progress in this area.
Tax Deduction and Affordable Housing Definition
A primary demand highlighted by NAREDCO is a significant increase in the income tax deduction limit for home loan interest on self-occupied properties. NAREDCO President Parveen Jain proposed raising the current cap from Rs 2 lakh to Rs 5 lakh. This adjustment, he argued, would enhance housing affordability and stimulate demand by reducing the financial burden on homebuyers. Additionally, Jain called for a revision in the definition of affordable housing. He recommended that homes priced up to Rs 75–80 lakh should be classified as affordable, compared to the existing ceiling of Rs 45 lakh. Such a redefinition would substantially expand the pool of eligible buyers, especially since GST on affordable homes is levied at a concessional rate of just 1 percent.
Rental Housing and Industry Status
The association also pushed for enhanced policy support for rental housing, pointing out that low rental yields—currently ranging from 1 to 3 percent—discourage private investment and make rental projects financially unviable for developers. Jain urged the government to provide appropriate tax incentives and other facilities to real estate developers to promote rental housing. On the long-standing issue of industry status, Jain reiterated that the sector has been seeking this recognition for years. Granting industry status would enable access to cheaper institutional credit, including for land acquisition and construction inputs, thereby reducing costs and fostering growth.
Economic Impact and Future Projections
Jain underscored the significant role of real estate in employment generation and its substantial contribution to the economy. He emphasized that it is time for policy parity, aligning the sector's treatment with that of other industries. Highlighting the sector's potential, Jain noted that the Indian real estate market is estimated to grow to $1 trillion by 2030, underscoring the need for supportive measures to unlock this growth. The association's recommendations aim to create a more conducive environment for investment, development, and homeownership, ultimately driving economic progress and social welfare.
