With Budget 2026 just days away, various industry bodies are presenting their wish lists to the Union Finance Ministry. The real estate sector has high hopes, urging the government to provide greater relief for home buyers and rental housing investors.
CREDAI and NAREDCO Call for Higher Home Loan Interest Deduction
New Delhi: Real estate developers’ organizations CREDAI and NAREDCO have requested that the income tax deduction on home loan interest be increased from the current ₹2 lakh limit to ₹5 lakh. The move is aimed at making homeownership more affordable and encouraging investment in the housing sector.
Revising Affordable Housing Definition
Both organizations have also sought changes to the definition of affordable housing. CREDAI President Shekhar Patel pointed out that currently, only homes priced up to ₹45 lakh qualify as affordable. In major cities, a ₹45 lakh budget does not suffice for a decent two-bedroom apartment. He noted that this definition has not been updated since 2017, despite rising construction material and land costs, and that GST of 1% is also levied on affordable housing projects.
Promoting Rental Housing
NAREDCO President Praveen Jain emphasized the need to promote rental housing in Budget 2026. He suggested easing income tax rules and relaxing associated conditions, including extending the tax holiday period for rental housing projects. Currently, tax benefits under Section 142 of the IT Act 2025 are available only if the project is notified by the central government—a condition he described as a major barrier for developers. Removing this restriction could boost new rental housing projects.
Increasing Standard Deduction on Rental Income
At present, a 30% standard deduction is allowed on rental income for repairs and maintenance. NAREDCO has proposed raising this to 50%, which could improve returns for investors and encourage more people to buy properties for rental purposes.
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