By Pawan Kumar Agarwal
As we stand on the threshold of the 2026 Union Budget, the Indian real estate sector finds itself in a unique “macrosweet spot.” With India’s GDP growth holding strong at over 8 per cent and the nation on a clear trajectory to becoming the world’s third-largest economy by 2030, the real estate fraternity is no longer looking for mere survival tactics. Instead, we are looking for the strategic architecture that will support a $30 trillion economy by 2047.
Industry leaders agree on one thing: The year 2026 will focus on structural substance and not cyclical momentum. The current economic climate has revealed that while luxury and high-end products have been resilient, the ongoing challenges we face as an urban community are caused by systemic problems that have existed for almost a decade.
Realigning the “Affordable” Benchmark
The most critical policy correction required today is a realistic redefinition of “Affordable Housing.” The current Rs 45 lakh price cap was established in 2017, a different era in terms of input costs. Since then, the price of land, steel, and cement has surged, making it nearly impossible for developers to deliver quality units within this bracket in any major metro.
The industry, led by voices from CREDAI and NAREDCO, has reached a consensus: this cap must be revised to Rs 90 lakh.
By raising this threshold, the government can effectively bring a massive portion of the mid-market segment under the 1 per cent GST bracket. This isn’t a demand for a subsidy; it is a request for alignment with current economic truths. It would immediately lower the entry barrier for millions of “aspirational” buyers who are currently priced out of tax benefits simply because of geography and inflation.
Empowering the Homebuyer
While supply-side reforms are vital, the engine of the sector is the individual homebuyer. To sustain the current 10-12 per cent CAGR the industry is witnessing, the “affordability of financing” must be addressed.
We strongly expect an increase in the tax deduction limit for home loan interest under Section 24(b). Raising this limit from Rs 2 lakh to Rs 5 lakh would provide much-needed breathing room for middle-class families facing the reality of higher EMIs. Furthermore, the reintroduction of incentives similar to Section 80EEA for first-time buyers would act as a powerful catalyst, converting fence-sitters into homeowners and ensuring that “Housing for All” remains a mission, not just a slogan.
Supply-Side Feasibility and GST 2.0
On the operations front, the industry is closely watching the rollout of ‘GST 2.0’. The move toward a simplified two-rate system is a welcome step, but the real estate sector specifically requires a reduction in the GST on works contracts.
Additionally, to revive the stalled momentum in low-income housing, we expect the reinstatement of tax holidays for developers dedicated to affordable projects. Without these fiscal nudges, capital will continue to migrate toward premium and luxury segments, leaving a critical gap in the urban housing ladder.
The Connectivity Multiplier
Real estate value is no longer determined by distance but by time. The government’s continued push for “Viksit Bharat” through massive infrastructure outlays, such as the expansion of RRTS corridors and the commissioning of new airports, is already transforming Tier-II and Tier-III cities.
In 2026, we expect the budget to double down on these multimodal transport hubs. For the industry, infrastructure spending is the ‘fuel’ that drives decentralisation, allowing us to build sustainable, self-sufficient satellite townships that ease the pressure on our primary metros.
The Call for Institutional Maturity
Finally, there is the long-standing quest for “industrial status.” Granting this status would be a game-changer for the sector’s financial health, allowing developers access to low-cost institutional credit and diversifying our funding sources beyond high-cost private equity and NBFCs.
Going forward, ESG (Environmental/Social/Governance) compliance is becoming increasingly important in the near future. With a goal of achieving Net Zero Carbon Emissions by 2047, there is an opportunity for the 2026 Budget to encourage “Green Building” with a lower stamp duty and/or the provision of interest subsidies for environmentally sustainable projects.
The outlook for 2026 is one of “measured yet sustainable growth”. The era of speculative bubbles has been replaced by a market driven by genuine end-user demand and institutional transparency, thanks to the maturity of RERA.
If the upcoming budget addresses the core issues of GST rationalisation, realistic price caps, and homebuyer tax relief, it will not just benefit real estate, it will fortify the very foundation of India’s economic growth for the next decade.
(The author is Managing Director of NK Realtors)
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