Real estate sector eyes tax cuts for affordable housing as FM Nirmala Sitharaman gears up to present Budget 2026

Budget 2026 Expectations: The countdown for the Union Budget 2026 has already begun and experts from different sectors are listing their wishes before Finance Minister Nirmala Sitharaman makes announcements at the Parliament. The Finance Minister is set to present Budget 2026 on 1 February, Sunday, in the Lok Sabha.

Ahead of the Union Budget 2026, the real estate sector has pinned hopes on the government for housing affordability through tax cuts and policy changes.

“The Budget presents a timely opportunity to accelerate India’s progress toward ‘Viksit Bharat’ while reinforcing the domestic consumption cycle. Measures that support consumer sentiment and disposable incomes can provide a meaningful boost to demand across sectors such as retail and real estate,” said Gautam Hari Singhania, Chairman and Managing Director of the Raymond Group.

Deduct tax on home loans, says industry experts

The real estate industry sought for tax reliefs for homebuyers to facilitate affordable housing, with leaders calling for home loan interest rate cuts through reduced taxes.

“On February 1, 2025, the union budget is expected to provide measures to improve the real estate segment. The industry seeks tax deductions on home loan interest, better subsidies for buyers, and disbursements to reduce EMIs and risks. Such steps can drive growth and urban development while restoring demand in luxury segments,” said Roots Developers director Rajan Yadav.

According to AU Real Estate Director Ashish Agarwal, the real estate sector is hoping for growth-focused incentives in the luxury housing segment as well.

“Increasing incomes, wider global exposure, and a desire for safe, amenity-rich communities are the demand-driving factors for premium homes in the NCR. Buyer sentiment will be further enhanced by supportive tax policies, streamlined stamp duties, and infrastructure development across important areas,” he said.

What tax reliefs do experts want?

To facilitate affordable housing, real estate industry leaders are also hoping that the government would bring back certain sections of the Income Tax Act.

According to ANAROCK chairman Anuj Puri, there is a strong tool at the disposal of the government to increase housing affordability — Section 80-IBA of the Income Tax Act, 1961.

“The most direct and immediate tool the government has at its disposal is to bring back the 100% tax holiday for developers of affordable housing under Section 80-IBA. This incentive, which expired in 2021, was very effective at getting more developers on board to launch more affordable housing projects. A limited-period tax holiday for Section 80-IBA projects approved within a defined window (say, 24-36 months) would be a high-impact, fiscally defensible intervention,” he said.

Budget 2026 should focus on enhancing homebuyer incentives, according to Rajat Khandelwal, group CEO of Tribeca Developers.

“On the demand side, enhancing homebuyer incentives will be important. An upward revision in the Section 24(b) home loan interest deduction, along with targeted benefits for first-time buyers, can improve affordability and sustain housing demand,” he said.

Tier II over metros

As per Jindal Realty president and CEO Abhay Mishra, Budget 2026 should focus on Tier II cities rather than just metros, given the housing momentum these areas have seen in the recent months.

“With better infrastructure and stable prices, these markets can grow faster if the budget boosts urban infrastructure spending, gives tax support to homebuyers, and encourages affordable housing,” he said.

“Continued focus on urban infrastructure, transport connectivity, and housing-linked development will be critical, especially as Tier II and Tier III markets emerge as the next engines of growth. Policy continuity, faster approvals, and incentives that encourage sustainable construction can significantly improve execution efficiency on the ground,” added Omaxe MD Mohit Gohel.

Industry leaders said a balanced Budget 2026 that addresses affordable and rental housing concerns could play a decisive role in reviving broad-based growth in the real estate sector.