Union Budget FY25-26 & Real Estate: What to Expect3 min read
The Indian real estate sector has been a cornerstone of the nation’s economy, reflecting its growth and challenges over the decades. From the post-independence housing shortages to the liberalization era’s construction boom, real estate has continually evolved, adapting to policy shifts and economic reforms. As we approach the Union Budget for FY25-26, stakeholders keenly observe potential changes that could shape the industry’s future.
Why Real Estate is a Good Investment in India?
Real estate has long been one of the most preferred investment avenues in India. With a rapidly growing economy, rising urbanization, and increasing disposable incomes, investing in real estate offers multiple benefits, including wealth creation, rental income, and portfolio diversification. Here’s why real estate remains a strong investment choice in India:
- Tangible Asset with Long-Term Value
Unlike stocks or mutual funds, real estate is a physical asset that provides security and stability. Property values generally appreciate over time, making it an excellent long-term investment. - Steady Rental Income
Rental yields from residential and commercial properties offer a passive income stream, ensuring cash flow stability. With increasing demand for housing and office spaces, rental returns continue to rise in metro cities and even in emerging urban areas. - Hedge Against Inflation
Real estate investments act as a natural hedge against inflation, as property prices and rental incomes tend to increase when inflation rises, ensuring that your investment retains its purchasing power. - Government Incentives & Tax Benefits
The Indian government has introduced multiple policies to boost real estate investments:
- Rising Demand & Urbanization
India’s urban population is expected to reach 600 million by 2030, driving the demand for housing, commercial spaces, and infrastructure. Government initiatives like Smart Cities Mission and affordable housing schemes are further fueling the sector’s growth. - Portfolio Diversification & Stability
Real estate diversifies an investment portfolio, reducing overall risk compared to volatile assets like stocks. During economic downturns, property investments tend to be more stable and less susceptible to sudden crashes. - Emerging Investment Opportunities
With trends like co-working spaces, co-living housing, and warehousing boom due to e-commerce growth, investors now have multiple options beyond traditional residential and commercial properties.
Current Taxation Framework in Real Estate

Anticipated Changes in the Union Budget FY25-26
While official announcements are pending, industry experts have proposed several recommendations to bolster the real estate sector:
- Reintroduction of Input Tax Credit (ITC) for Under-Construction Properties:
- Developers are advocating for the reinstatement of ITC to reduce construction costs, which could lead to more affordable housing options for buyers.
- Adjustment in Holding Period for LTCG:
- There’s a push to reduce the holding period for LTCG eligibility from 24 months to 12 months, aligning real estate with other asset classes like equities.
- Incentives for Affordable Housing:
- Enhanced tax deductions for both developers and buyers in the affordable housing segment could stimulate demand and supply in this crucial area.
- Revision of Stamp Duty Rates:
- Uniformity and potential reduction in stamp duty across states are being considered to make property transactions more cost-effective.
Source: TOI | CAClubIndia
Conclusion
The Union Budget FY25-26 holds significant potential to influence the trajectory of India’s real estate sector. Stakeholders are optimistic that the government will introduce measures to streamline taxation, incentivize investment, and promote sustainable growth. As always, it’s prudent for investors and developers to stay informed and consult with financial advisors to navigate the evolving landscape effectively.
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