Finance Minister Nirmala Sitharama today presented the first full budget 2025-26 of Modi 3.0. The announcements have been aimed at initiating reforms in personal income tax and urban development, the two key areas that will have a bearing on the real estate sector.
The setting up of Rs 1 lakh crore urban challenge fund for revitalising cities, exemption of tax on income upto Rs 12 lakhs, claiming nil valuation on two self-occupied properties, support for GCCs and SWAMIH 2.0 for expediting completion of stuck housing projects are the primary announcements that will benefit the real estate sector.
“The Government will set up an Urban Challenge Fund of Rs 1 lakh crore to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’ announced in the July Budget,” the finance minister said in her speech.
Pradeep Aggarwal, Chairman, Signature Global (India) Ltd. said that the Union Budget 2025 is a game-changer, reinforcing India’s commitment to inclusive and sustainable urban growth.
“The SWAMIH Fund 2 with ₹15,000 crore will accelerate the completion of stalled housing projects, bringing relief to over one lakh homebuyers. The ₹1 lakh crore Urban Challenge Fund will play a pivotal role in transforming cities into vibrant growth hubs, ensuring balanced regional development.”
Dhiren Tharwani, Director, Tharwani Realty said that these initiatives will spur much-needed growth in city redevelopments and enhancement of existing infrastructure.
“The emphasis on urban renewal is a move in the right direction toward making cities smarter and more sustainable and we look forward to joining this transformative journey with innovative, future-ready developments.”
Jayant B Manmadkar, CFO, Brigade Group said that the union government has presented a budget for inclusive development to accelerate growth.
“While there has not been any specific announcement for the real estate sector, the enhanced focus on UDAAN, which integrates smaller towns into the airline network and boosts tourism, will positively impact the hospitality sector. Streamlining the process and speeding up approvals for merger schemes and fast-track mergers will further benefit the industry’s consolidation.”
Ashish Puravankara, Managing Director, Puravankara Limited said that the Union Budget 2025-26 is a strong and progressive one for the real estate sector, driving economic growth and urban transformation.
“The rationalisation of income tax slabs, raising the exemption limit to ₹12 lakh, revision of tax structure up to Rs. 24 lakhs, and increasing rental TDS thresholds will boost disposable income. The tax exemption on notional rent for a second self-occupied home is a significant relief, encouraging investment in real estate. Coupled with a higher standard deduction, these measures will drive housing demand, particularly in the affordable and mid-segment categories.”
The Government announced that there will be no income tax payable upto income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000.
“This is reflective of our government’s trust on the middle-class tax payers,” the minister said.
Garvit Tiwari, Director & Co-Founder, InfraMantra said this is not just a welcome move at this juncture considering falling consumption and rising inflation but a revolutionary move for India’s tax paying and consuming class.
“The overall impact of this move will be seen in increased consumption, including discretionary and more importantly by increasing demand for homes which off late has been on a declining trend owing to rising prices.”
Ankur Jalan, CEO, Golden Growth Fund (GGF) said as India aims to become $30 trillion economy by 2047, the country must embark upon a phase of rapid development in the next two decades. To this end, this move will boost consumption and enhance savings.
“It will also increase investment across all asset classes, including AIFs and real estate, by having a multiplier effect on the economy by boosting incomes and encouraging further investment. The induced savings will also help government create a larger fund for investment and other capital expenditure.”
Mohan Raju, Managing Director and CEO, Kalyani Developers said that the central government has introduced a budget focused on fostering inclusive growth. However, it has largely overlooked several demands of the real estate sector.
“Raising the tax exemption threshold from Rs 7 lakh to Rs 12 lakh will enhance individuals’ surplus income, potentially boosting investment opportunities for prospective home buyers.”
Rakesh Reddy, Director, Aparna Constructions said the budget also brings in some relief for mid-income and affordable home buyers through the SWAMIH Fund. The much anticipated tax reforms for the mid income groups will further increase spending potential and drive home buying in the country.
“While these measures are welcome, several key industry expectations for the real estate sector remain unaddressed. Granting industry status to real estate, streamlining approval processes, and enhancing liquidity support for developers were essential priorities which would have gone a long way in accelerating real estate growth.”
The Budget announced SWAMIH Fund 2 with fund of Rs 15,000 crore that will aim for expeditious completion of another 1 lakh units.
Vineet Nanda, Director-Sales & Marketing, Krisumi Corporation said the launch of SWAMIH Fund 2, with a dedicated corpus of Rs 15,000 crore to complete one lakh stalled housing projects, stands out as a landmark initiative.
“This measure will accelerate the completion of essential housing projects and restore buyer confidence, laying a strong foundation for a more robust residential market.”
Sahil Agarwal, CEO, Nimbus Group said that the Special Window for Affordable and Mid-Income Housing (SWAMIH) scheme, which has already played a pivotal role in unlocking delayed housing projects, is set to receive a major boost.
“The government has proposed the creation of SWAMIH Fund 2, a blended finance facility with contributions from the government, banks, and private investors. With a ₹15,000 crore corpus, this initiative aims to accelerate the completion of an additional 1 lakh housing units, providing crucial relief to homebuyers and stimulating growth in the real estate sector.”
Aman Gupta, Director, RPS Group said that SWAMIH has been expanding its focus from the completion of stressed housing projects by completing 50,000 dwelling units to a goal of completing 40,000 dwelling units by 2025.
“The government’s increased focus on solving the middle-class urban housing dilemma is further evident from the establishment of SWAMIH Fund 2 with a blended approach, which aims to collect ₹15,000 crores. This is a great step towards completing pending projects and alleviating the pain for millions of families managing both EMIs and rent.”
Sandeep Mangla, Managing Director, Forteasia Realty Pvt. Ltd. said Fund 2 of SWAMIH represents sophistication in the evolution of real estate financing systems.
“This allows for effective blended finance which involves contributions from the government, banking systems, and private organizations. All of this provides a solid foundation for completing the projects.”
The Budget also announced that homebuyers can claim annual value on two self-occupied homes.
“Presently tax-payers can claim the annual value of self-occupied properties as nil only on the fulfilment of certain conditions. Considering the difficulties faced by taxpayers, it is proposed to allow the benefit of two such self-occupied properties without any condition.”
L.C. Mittal, Director, Motia Builders Group said that Deductions related to two self-occupied properties treated as taxable to the tune of zero is a remarkable shift captivating the nuances of real estate ownership within urban India.
“This policy will greatly benefit property owners whose personal and professional commitments span two or more metros, as it alleviates their tax liabilities while keeping pace with the realities of modern day living.”
Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited said that allowing the occupation of two properties and maintaining a nil valuation will boost real estate tax policy modernization.
“This reform is socioeconomic in nature, providing investment incentives to property owners and making allowance for multi-city living. It will indeed increase supply to the housing market whilst enhancing geographical mobility of the owners.”
Zafeer Ahmed,Managing Director, XRE Consultants said that the government has carefully structured this three-year plan on infrastructure related to projects from public private partnerships, as this will yield significant returns over a longer period.
“This broad vision is also applicable to enhancing air cargo infrastructure, where upgrading of warehousing facilities to accommodate high quality perishable horticulture produce is greatly anticipated. It is expected that extending fifty year, interest free loans will aid in persuading the states to spend heavily without aggravating their budgets.”
Anurag Goel, Director, Goel Ganga Developments said that expanding existing projects and starting a new fund marks strategic planning when attempting to solve problems in the real estate industry.
“Mounting liquidity in the market alongside easing some pressure on homebuyers is bound to happen with the completion of 90,000 units by the year 2025. These changes in tax policy for those who occupy the properties reveal an emergent comprehension of the housing sector today.”
Saurabh Tyagi, Co-Founder and CEO of PropChk said that the nuanced understanding of market dynamics is evident from the comprehensive approach taken on real estate sector reforms involving completion of projects under SWAMIH and changes to the tax policy.
“After the successful delivery of 50,000 units and 40,000 in supply scheduled alongside tax incentives for owners of multiple properties, a sustainable sector growth becomes easier to obtain.”
