The Indian real estate sector continues to be a crucial pillar of economic growth. While the 2025 Union Budget didn’t introduce major overhauls, the reforms announced are set to provide much-needed support to the industry. With a strong emphasis on infrastructure development, tax relief measures, and investment-friendly reforms, the industry is set to benefit across residential, commercial, and second-home segments.
Key Reforms and Their Impact on Real Estate Capital Gains Tax Reforms and Rental Market Boost
The budget has introduced adjustments to capital gains tax regulations, aimed at making property transactions more attractive, particularly for high-value real estate assets. Additionally, the annual threshold for Tax Deducted at Source (TDS) on rental income has been increased from Rs 2.4 lakh Rs 6 lakh. This move significantly reduces compliance burdens for landlords and encourages investment in the rental housing market.
Increased Disposable Income and Housing Demand
A key highlight of the budget is the increase in the income tax exemption limit to Rs 12 lakh under the new regime. This effectively grants full tax exemption to individuals earning up to this amount, boosting consumer confidence, savings, and discretionary spending. In turn, this is expected to drive demand across the residential real estate segment, including affordable, mid-income, and premium housing.
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Relief for Stalled Housing Projects
The allocation of Rs 15,000 crore to the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund 2 is expected to provide relief to over one lakh homebuyers caught in stalled projects. By addressing funding gaps and ensuring project completion, this initiative enhances confidence in the sector and stimulates demand.
Infrastructure and Connectivity Expansion
Enhanced budgetary allocations for highways, railways, and regional connectivity are set to improve accessibility to emerging real estate hubs. With better infrastructure linking metropolitan cities to peripheral regions, upcoming residential and commercial developments stand to gain significantly, fostering economic activity in these areas.
Tax Relief Measures for Homeowners
In a notable move, the budget now allows homeowners to claim nil valuation for two self-occupied properties, up from the previous limit of one. This eliminates the tax burden on notional rental income from second homes, making real estate investment more attractive for individuals seeking additional residential assets.
Second-Home Market: A Rising Opportunity
One of the standout beneficiaries of these reforms is the second-home market,
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