By Mr. Boman Irani, Chairman & Managing Director, Rustomjee Group

“The Union Budget is among the most consequential policy towards India’s growth with a direct bearing on economic sentiment and consumer confidence. Real estate remains a critical driver of national growth, contributing significantly to GDP, employment generation and allied industries. We look to the 2026 Union Budget as an opportunity to further strengthen housing demand. From the sector’s perspective, there are three major expectations.

The definition of affordable housing should be based purely on unit size (currently at 60 Sq. m for metros and 90 Sq. m for non-metros) without a price (currently INR 45 lakh is fixed in 2017 which after inflation is approximately INR 75–80 lakh today). Putting any cap would not reflect land costs, statutory premiums, construction expenses: all of which vary significantly across cities and regions.

The home loan interest deduction under Section 24(b), currently capped at INR 2 lakh (and unchanged for nearly a decade), should be enhanced to at least INR 10 lakh per home loan at least for first time home buyers. Annual interest outgo for middle-income buyers in urban markets now averages more than INR 7.5 lakh. Annual interest outgo for middle-income homebuyers in urban markets now averages over INR 7.5 lakh. With nearly 36% of India’s population currently residing in urban areas (a figure projected to rise to almost 50% by 2050), this cost burden is increasingly concentrated here a growing share of the country’s population and economic activity is anchored.

There is a long-standing need to rationalise GST by restoring ITC to developers, enabling cost efficiencies and transparency. In the interim, we believe GST on homes qualifying under the revised definition of affordable housing should be NIL (currently 1%), while all other residential units should attract a GST rate not exceeding 2.5% (currently 5%). Such rationalisation would lower effective costs for the home buyers, stimulate higher transaction without majorly affecting the revenue generation due to broader sectoral activity. Collectively, these three measures would go a long way in setting the pace for sustainable urban development, supporting the home buyer and enable developers to meaningfully contribute to the vision of Viksit Bharat articulated by our Hon’ble Prime Minister, while remaining fully aligned with the Government’s long-term economic and nation-building priorities.”