Union Budget 2025 | Real estate sector needs robust govt support to make home buying more affordable, says One Group director Udit Jain

Finance Minister Nirmala Sitharaman will be presenting the Union Budget 2025 on February 1 and as such industrial sectors are looking forward to incentives from the government including the real estate sector.

"Over the past few years, the prices of land and construction materials have risen sharply, not only in metropolitan cities but across the country. This, coupled with sustained demand, has significantly driven up property prices, making homeownership increasingly challenging for many. As a result, the real estate sector, particularly the housing segment, requires robust government support to make home buying more affordable for aspiring buyers," Udit Jain, Director, One Group director said.

He added, "Government intervention through targeted incentives could help alleviate the financial burden on homebuyers. One crucial area to address in the upcoming budget is the enhancement of the income tax deduction limit on home loan interest under Section 24(b), which has remained unchanged for over a decade. Increasing this limit would provide much-needed relief, particularly for buyers in high-cost urban markets."

"Another key measure is the extension and expansion of the Credit Linked Subsidy Scheme (CLSS). The government should consider raising the property price threshold for affordable housing eligibility, enabling more middle-income families to benefit from this scheme. Such an adjustment would not only boost demand but also encourage developers to focus on affordable housing projects, a segment currently experiencing a downturn in supply."

Speaking on rationalizing stamp duty rates, especially in Tier-II and Tier-III cities, Jain said it could significantly stimulate housing demand among mid-income and low-income groups. "High stamp duty rates often act as a barrier for homebuyers, and reducing them could make homeownership more accessible in these emerging markets."

"Another critical issue that the government should address—or guide the respective state governments to resolve—is the disparity between circle rates (also known as collector rates) and prevailing market prices in certain cities such as Bhiwadi and Tijara in Rajasthan, and Agra in Uttar Pradesh. In these areas, circle rates are often higher than actual market prices, leading to challenges in completing transactions between prospective buyers and sellers," Jain said.

This discrepancy creates significant problems, including tax implications for both parties. The difference between the market rate and the circle rate is treated as notional gains and attracts taxation for both the buyer and the seller, even if no real gains are realized. Rationalizing circle rates to align them more closely with market values would help facilitate smoother transactions and alleviate these issues, he signed off.

Union Budget 2025 | Nirmala Sitharaman, who continues to be Finance Minister, will present her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', reports suggest there might be a tax relief for those making up to Rs 15 lakh per year. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.