As India prepares for the Union Budget 2026, the real estate sector, particularly the rental housing market, has a clear wishlist centered on tax clarity and REIT reforms. Stakeholders are seeking interventions that promote policy stability, enhance affordability, provide liquidity support, and foster infrastructure-led growth.
One major expectation revolves around tax rationalization. For Real Estate Investment Trusts (REITs), stakeholders are hoping for tax stability, uniform stamp duty structures, and further structural reforms to deepen India's REIT market, which is currently valued at ₹1.66 lakh crore. Specific requests include expanding tax-free dividend distributions to all REITs, capping Foreign Portfolio Investor (FPI) interest tax at 5% to attract more global investment, and rationalizing GST rates on input materials and services to ease cost pressures for developers. Extending Section 80C eligibility to REIT units, mirroring benefits for Equity Linked Savings Schemes (ELSS), is also under consideration to offer retail investors a tax-efficient investment avenue.
For individual homebuyers and tenants, there's a strong push to re-evaluate affordability metrics to align with current market conditions. Industry experts have suggested redefining affordable housing from the current INR 45 lakh to at least INR 75 lakh for tier-I cities. CREDAI has also urged the government to increase the deduction limit on interest paid on home loans to Rs 5 lakh from the current Rs 2 lakh. Additionally, there are calls to reduce the taxable income by raising the ₹2 lakhs cap on home loan interest deduction and lower GST on commercial leasing. Some are advocating for affordability to be determined solely by unit size, doing away with rigid price caps that don't account for inflation and land costs.
On the rental housing front, CREDAI has proposed a National Rental Housing Mission, recommending fiscal incentives for developers and tax relief for tenants to stimulate the organized rental housing market. This initiative aims to address the increasing demand for rental homes driven by rapid urbanization and migration to Tier 1 and Tier 2 cities. Such a mission would encourage institutional participation, formalize the rental market, reduce informal settlements and support workforce mobility.
The real estate sector is also seeking long-term structural reforms to improve execution and policy clarity. This includes faster approvals, single-window clearances, and time-bound environmental permissions to reduce holding costs and ensure timely project delivery. Granting industry status to real estate could improve access to institutional funding, reduce borrowing costs, and enhance transparency.
Overall, the real estate sector anticipates that the Budget 2026 will introduce structural reforms that improve policy execution and clarity. Support for emerging commercial asset classes can strengthen infrastructure-led growth. Even partial implementation of these measures could boost long-term confidence and investment in the sector.
