Affordable Housing & Tax Benefits: What Real Estate Gained in Budget 2025?
Budget 2025 has eliminated all criteria by allowing two residences to be considered self-occupied, banning the tax burden for notional rental revenue. The Union Budget 2025 has emerged as a game changer for homebuyers, providing numerous tax breaks and incentives. The government's actions, which range from easing tax policies to increasing affordable housing, are expected to have a longterm influence on the real estate business and homebuyers. Finance Minister Nirmala Sitharaman made several important announcements on Saturday, including tax improvements under the new tax regime and the exemption of a second home from taxation for notional rental income. All homebuyers will receive from Budget 2025 is as follows:
Tax Reforms on Income: More Investments, More Savings A noteworthy outcome of the budget is the expansion of the tax refund under the new tax system. People with annual incomes up to Rs. 12 lakh (Rs 12.75 lakh for paid workers) are exempt from paying personal income tax. “This action greatly
increases disposable income, enabling people to save more for housing investments," says Adhil Shetty, CEO of Bankbazaar.com. The middle class will have more money thanks to the streamlined tax system, which will boost household spending, savings, and real estate and equity investments.
Government announces SWAMIH Fund-2 to complete 1 lakh homes in stalled projects In Budget 2025, an additional 1 lakh units will be allocated ₹15,000 crores to the new SWAMIH Fund 2, which would help lakhs of homeowners whose real estate projects have been delayed. The government's strong drive to address the housing problem is demonstrated by the completion of 50,000 dwelling units under the current SWAMIH project, with an additional 40,000 in the works, according to analysts. The growth of the SWAMIH-2 Investment Fund stabilises the market, increases the number of ready-to-buy homes available to first-time purchasers, and may even lower the cost of housing. According to Grant Thornton Bharat Partner and Government Consulting Leader Ramendra Verma, the fund helps homebuyers, boosts trust in the real estate industry, and encourages the completion of stalled projects, all of which contribute to the sector's renaissance. PropEquity reports that around 2000 housing projects totalling 5.08 lakh units in 42 locations are halted. There have been 345 projects totalling 76,256 units in 28 tier II cities and 1,636 projects totalling 4,31,946 units in 14 tier I cities that have stagnated.
The government wants to increase the yearly threshold for TDS on rent from the existing ₹2.4 lakh to ₹6 lakh. According to real estate experts, increasing the yearly TDS ceiling on rent from ₹2.40 lakh to ₹6 lakh will also greatly help landlords and small taxpayers by reducing the burden of compliance.
Govt. to set up ₹1 lakh Crore Urban Challenge Fund to ramp up urban infrastructure The creation of an urban development fund will improve infrastructure, open up real estate opportunities, and turn cities into significant centres of growth. "Incentivised urban reforms and the 1 lakh crore Urban Challenge Fund will improve city planning, municipal services, and governance—all of which are important drivers of long-term commercial growth," stated Ramesh Nair, CEO of Mindspace Business Parks REIT.
Support for Global Capability Centres (GCCs) India would be bolstered as a global business hub by the introduction of a national guiding framework to assist states in luring and promoting GCCs.
In light of India's growing economic clout, Puri predicted that this action will increase demand for office space in Tier-II and Tier-III cities as well as major metropolises like Bengaluru, Mumbai, Hyderabad, Pune, and Chennai.
Budget 2025 and affordable housing No affordable housing policies were included in Budget 2025. The housing program would have benefited from a national policy for rental housing. According to G Hari Babu, National President of NAREDCO, the Budget 2025 could have also addressed some important areas, especially the affordable housing segment. The government should prioritise revisions to the current housing cap, which has been stagnant for almost eight years, making it difficult for developers to deliver affordable homes within the set limits. Rising home loan interest rates and the antiquated definition of affordable housing have created barriers for many potential homeowners. The Union Budget 2025 has undoubtedly set the stage for a transformative shift in the real estate sector, bringing relief to homebuyers and investors alike. From tax benefits and increased TDS thresholds to the expansion of the SWAMIH Fund and urban infrastructure development, these strategic reforms are expected to drive housing demand, boost market confidence, and accelerate stalled projects. However, the absence of new affordable housing policies remains a missed opportunity, leaving many aspiring homeowners and developers seeking further government intervention. As India continues its journey toward urban expansion and economic growth, sustained policy support and adaptive reforms will be crucial in shaping a resilient and inclusive real estate ecosystem.
