Budget 2026 Wish List: Real Estate Experts Seek GST Easing, New Affordable Housing Norms

Budget 2025 Expectations: Finance Minister Nirmala Sitharaman will present the Union Budget 2026-27 in February, and the real estate sector expects some relief in terms of revision of definitions of affordable housing, higher allocations for provisions for the Pradhan Mantri Awas Yojana, and rationalisation of Goods and Services Tax (GST) on under-construction properties.

The revised GST 2.0, implemented in September 2025, is expected to provide a significant boost to the real estate sector by easing raw material costs over the period. However, industry stakeholders continue to seek further relief, particularly through the rationalisation of GST rates on construction contracts.

Lowering of GST

The GST 2.0 implementation ensured the reduction of GST on construction materials like cement, granite, marble, etc. Most of these items were taken from 28% tax bracket to 18% tax bracket.

However, developers are still hoping for the rationalisation of GST on under-construction properties.

"Inflation in construction costs has gone up since 2017. Some of the main demands are lowering the GST on construction contracts from 18% to 12% - and ideally 5% - and bringing back tax breaks for developers who build affordable housing," stated Anuj Puri, Chairman - ANAROCK Group.

"Developers are looking for rationalisation of GST on the properties which are still under construction and also for clarifications on the input tax credits, so that the demand for housing is supported. An income tax deduction for homebuyers, especially those in the affordable and mid-income segments, would be considered a major move and would really help to create the right atmosphere," noted Shashank Gupta, Director, RPS Group.

Reevaluation of Affordable Housing Definition

The industry stakeholders are also expecting that the government may pay attention to their long-pending demand for the reevaluation of the affordable housing definition. "The industry needs the price band by which the government defines affordable housing to go up from INR 45 lakh to INR 80-90 lakh. Also, it should expand the criteria for affordable housing sizes, which are currently 60-90 sq m," added Puri.

Easier Access To Funding

The real estate experts believe that the revision of Section 80EEA ( of the Income Tax Act) will provide easier funding access to homebuyers. "Policy measures such as expanding Section 80EEA benefits, making credit flow easier through lower interest subvention, and widening the definition of affordable housing could be measures to reinvigorate demand," highlighted Anurag Goel, Director, Goel Ganga Developments.

As India steps into 2026, housing demand is expected to undergo a significant shift, with mid-income homes emerging as the primary growth driver in the real estate market. In this context, a re-evaluation of affordable housing policies, rationalisation of sectoral taxes, and similar supportive measures could play a crucial role in strengthening growth prospects for the industry.