Bengaluru: Ahead of the Union Budget 2026, the real estate sector has sought tax reliefs and policy changes to make housing affordable for new-age urban citizens and the growing middle-class.
As the country progresses towards its goal of becoming the third-largest economy in the world, housing must be treated as a national economic priority, say real estate developers.
“Without adequate, accessible housing, new-age urban citizens and the growing middle-class will face increasing pressure directly impacting productivity and economic growth. Affordable and mid-market housing, therefore, cannot be overlooked,” says Murali Malayappan, Chairman & Managing Director, Shriram Properties Limited.
The affordable housing cap should be increased from Rs 45 lakh to Rs 60-70 lakh to reflect today’s costs and buyer profiles, he adds.
Satya Prakash Gupta, CFO, Concorde favours the cap to be increased to Rs 90 lakh. He adds that home loan interest deduction under Section 24(b) should be increased from Rs 2 lakh to Rs 3-5 lakh, and the Section 80C limit for principal repayment be raised to Rs 2.5 lakh.
India faces an estimated urban housing shortage of over 10 million units, with a majority of the gap concentrated in the economically weaker and lower-income segments. Addressing this deficit requires renewed policy thrust to improve home-loan affordability for first-time buyers, says Anuj Sharma, COO, India Mortgage Guarantee Corporation.
“Strengthening interest-linked incentives for these households would directly support demand, particularly in Tier II and Tier III cities where aspirations remain strong but affordability is under pressure,” he says.
The industry also wants Section 80EEA reinstated to give first-time buyers an extra Rs 1.5 lakh interest deduction.
Priyanka Raju, Director, Kalyani Developers, says, “The upcoming Union Budget has an important role to play in bridging the gap between urban aspirations and financial realities. With property prices and home loan rates rising, a meaningful enhancement in tax relief on interest and principal repayments would go a long way in supporting end-users.”
“The real estate sector is hopeful that the government would consider its long-standing demands of rationalising of GST on construction contracts from the current 18% to 12% or lower. This will provide immediate relief to both homebuyers and developers alike,” says Pradyumna Krishnakumar, Executive Director & Interim Chief Financial Officer, Brigade Enterprises Limited.
The industry has also demanded easing project-level financing, enabling structured private credit, and regulatory frameworks for alternative investment platforms. “These measures can unlock long-term capital, support office expansion beyond core metros, and strengthen real estate’s role in employment and urban growth,” says Sudarshan Lodha, Co-founder & CEO, Strata.
Sunil Pareek, Executive Director, Assetz wants the government to present a momentum budget, and not a stimulus budget. “If cities work better, housing markets will follow. The centre of gravity of India’s growth has decisively shifted to its cities. Strong signals on urban infrastructure, jobs and capital confidence will sustain housing demand far more effectively than isolated housing,” he says.
Abdulkader Bengali, MD, Hansgrohe India, says the growing middle-class is increasingly seeking luxury residential and hospitality experiences – spaces that are not only premium and well-designed, but also efficient and sustainable, reflecting evolving lifestyles and global exposure. “This shift calls for policy frameworks that strengthen infrastructure, urban planning, and housing ecosystems, ensuring access to high-quality living, while maintaining affordability and long-term value. Encouraging responsible construction practices, skill development, and quality-led execution can elevate standards across both luxury residential and hospitality segments,” he adds.
Ramani Sastri, Chairman & MD, Sterling Developers Pvt Ltd has asked the government to raise the deduction limit for interest payment on home loans from the existing Rs 2 lakh a year, to Rs 5 lakh, which will add momentum to the housing sector. “This would not only drive growth in the real estate sector, but also stimulate demand around 250 ancillary industries, thereby boosting job creation across sectors,” he says.
India’s workforce is steadily moving towards hybrid models, increasingly relying on shared spaces. Making construction more viable will encourage the creation of modern, well-designed work environments which will ensure that talent across the country has access to world-class infrastructure to innovate, collaborate, and grow, says Manas Mehrotra, Founder, 315Work Avenue.