With Budget 2026 on the horizon, the real estate sector is making a strong appeal to the central government. Industry leaders want clear policies to revive housing demand and help restart stalled projects across the country.
Developers Highlight Financial Challenges
Real estate developers point to several pressing issues. Rising land prices and increasing construction costs have created significant hurdles. Tax thresholds have not kept pace with current market conditions, making many housing projects financially unviable. This problem is especially acute in major urban centres where development costs are highest.
Calls for Policy Alignment
Industry stakeholders are urging the government to align tax and GST policies with today's housing prices. They seek targeted support for both homebuyers and developers to stimulate the market.
A crucial demand involves revising the definition of affordable housing. The current Rs 45 lakh cap no longer reflects actual project costs in many growth corridors, according to sector representatives.
Specific Recommendations from Visakhapatnam
E. Ashok Kumar, President of the CREDAI Visakhapatnam Chapter, spoke about the outdated nature of current limits. He explained that the affordable housing ceiling and its associated one per cent GST benefit do not match prevailing land and construction costs in most development areas.
Kumar proposed concrete measures to address these challenges:
- Increasing the affordable housing limit to Rs 80–90 lakh
- Reducing GST on works contracts from 18% to 12%
He believes these steps could improve project viability significantly. They would help revive stuck developments and increase housing supply across various markets.
Support for Middle-Income Buyers
Developers also seek stronger incentives for first-time homebuyers, particularly in the middle-income segment. This group often falls outside affordable housing benefits under current definitions.
Kumar noted that a large number of buyers in this segment exceed the Rs 45 lakh threshold. Therefore, they do not qualify for the one per cent GST rate and related tax benefits designed to make housing more accessible.
Additional Demands from the Sector
The real estate industry has put forward several other requests for consideration in Budget 2026:
- Restoring the additional interest deduction under Section 80-EEA
- Easing credit availability for developers to facilitate project completion
Sector representatives believe these measures could help bring down housing costs and reduce EMIs for homebuyers. This would make home ownership more achievable for a broader segment of the population.
Housing as Core Infrastructure
Kumar made a broader argument about how government should view housing. He urged authorities to treat housing as core infrastructure rather than merely an asset class. This perspective acknowledges the needs of rapid urbanisation across India.
While initiatives such as PMAY-Urban 2.0 reflect positive policy intent, Kumar said further refinements are necessary. These improvements would help translate policy into actual housing supply, particularly in Tier 1.5 and Tier 2 cities where growth potential remains strong.
The real estate sector's message is clear as Budget 2026 approaches. Policy clarity and targeted support could unlock housing demand, revive stalled projects, and address the growing need for quality housing across urban India.
