What Real Estate Benefits Were Announced in Budget 2025?

Union Budget 2025-26: Key Highlights for Real Estate

On February 1, Finance Minister Nirmala Sitharaman unveiled the Union Budget 2025-26, prioritizing economic growth, infrastructure expansion, and tax reforms. With a strong focus on urban development, housing, and investment, the budget introduces several measures that impact the real estate sector. While no direct changes were made to property tax or home loan benefits, various initiatives aim to boost urban infrastructure and promote housing development, fostering long-term growth in the industry.

SWAMIH Fund 2: Boosting Affordable and Mid-Income Housing

The Special Window for Affordable and Mid-Income Housing (SWAMIH) initiative has successfully delivered 50,000 homes in stalled housing projects, providing much-needed relief to homebuyers. Additionally, another 40,000 units are set for completion in 2025, easing the financial burden on middle-class families juggling both home loan EMIs and rental payments.

Building on this momentum, the government has announced SWAMIH Fund 2, a 15,000 crore blended finance facility backed by contributions from the Government, banks, and private investors. This initiative aims to fast-track the completion of 1 lakh more housing units, further strengthening the affordable housing segment and driving real estate sector growth.

Tax Relief for Residential Property Investors

In a significant move for property owners, the government has proposed relaxing tax rules for self-occupied properties. Currently, taxpayers can claim the annual value as nil only under specific conditions. However, to ease financial burdens, the new proposal allows individuals to claim this benefit for two self-occupied properties without any conditions.

This change provides much-needed tax relief for homeowners and investors, encouraging property ownership while enhancing affordability in the real estate market.

Increase in Annual Limit for TDS on Rent

The annual limit for Tax Deducted at Source (TDS) on rent has been increased from 2.40 lakh to 6 lakh. This change aims to reduce the number of transactions subject to TDS, offering significant relief to small taxpayers who receive lower rental income.

This move is expected to simplify the tax process for landlords with smaller rental payments, enhancing ease of doing business and reducing the financial strain on small property owners.

Public-Private Partnership (PPP) in Infrastructure

The government plans to introduce a 3-year pipeline of infrastructure projects under the Public-Private Partnership (PPP) model across various ministries. States will also be encouraged to adopt this approach and can seek assistance from the India Infrastructure Project Development Fund (IIPDF) to develop and prepare their own PPP proposals.

This initiative is designed to boost collaboration between the public and private sectors, accelerating infrastructure development while fostering growth and investment opportunities.

Reforms in the Urban Sector

The government plans to incentivize urban sector reforms, focusing on key areas such as governance, municipal services, urban land management, and urban planning. These reforms aim to enhance the efficiency and sustainability of urban development, improving quality of life for city residents and driving long-term growth in urban areas.

Urban Challenge Fund: Driving Growth and Redevelopment

The government has announced the establishment of an Urban Challenge Fund worth 1 lakh crore to support key proposals outlined in the July Budget. These include initiatives like 'Cities as Growth Hubs', 'Creative Redevelopment of Cities', and 'Water and Sanitation'.

This fund will cover up to 25% of the cost for bankable projects, with the requirement that at least 50% of the cost be financed through bonds, bank loans, and Public-Private Partnerships (PPPs). A proposed allocation of 10,000 crore has been earmarked for 2025-26, reinforcing the government's commitment to sustainable urban development and infrastructure enhancement.

Alternate Investment Funds (AIFs): Certainty in Taxation

Category I and Category II Alternate Investment Funds (AIFs) are actively investing in sectors like infrastructure and other growth-focused industries. To foster stability and encourage investment, the government proposes to provide tax certainty for these entities, particularly regarding gains from securities.

This move aims to enhance the attractiveness of AIFs for investors, ensuring a more predictable tax environment that supports growth in critical sectors.

National Framework for Global Capability Centres (GCC)

The government will develop a national framework to guide states in promoting Global Capability Centres (GCCs) in emerging tier-2 cities. This framework will include recommendations for improving talent availability, infrastructure, and building-by-law reforms, as well as establishing mechanisms for industry collaboration.

This initiative aims to foster economic growth in smaller cities, creating opportunities for businesses while enhancing the overall business ecosystem.

Extension for Start-up Incorporation Benefits

The government remains committed to supporting the Indian start-up ecosystem. To further encourage growth, the proposal includes an extension of 5 years for the incorporation period, allowing start-ups that are established before April 1, 2030 to continue benefiting from available incentives.

This extension aims to provide greater opportunities for start-ups, fostering innovation and economic growth across the country.

Support for State Infrastructure Development

The government has proposed an outlay of 1.5 lakh crore for interest-free loans to states over a 50-year period. These loans are intended to support capital expenditure and incentivize reforms in infrastructure development, helping states boost their economic growth and enhance public infrastructure.

This initiative aims to drive long-term infrastructure improvements across states, facilitating sustainable development and fostering a more efficient economy.

By LNN (Liyaans News Network)