As India gears up for Budget 2025, the Confederation of Real Estate Developers' Associations of India (CREDAI) has suggested some key reforms in the housing sector to make affordable housing more accessible for the country’s middle-class families. Among the primary recommendations, CREDAI has called for a 15% income tax rate on affordable housing projects, aimed at enhancing the viability of low-cost homes for developers and making homeownership easier for the middle class.

Currently, the tax rate for affordable housing projects is higher, making it financially challenging for developers to build homes at affordable prices. By reducing the income tax on these projects, CREDAI believes that the government can stimulate the construction of affordable housing, thus meeting the immense demand for homes in this category. This measure would be a much-needed boost for the real estate sector, and it is expected to have far-reaching effects on the housing market.

Another key recommendation from CREDAI is the revision of the price cap on affordable housing, which is currently set at Rs 45 lakh. According to CREDAI, this price point excludes many homes that could potentially be affordable for middle-class homebuyers. By increasing this cap, more homes could fall under the category of affordable housing, thereby making them accessible to a larger number of people, especially the middle class, who are currently finding it difficult to buy homes due to high prices.

CREDAI's Vision for the Real Estate Sector
The real estate sector plays a crucial role in the Indian economy, contributing approximately 53% to the GDP, both directly and indirectly. It is also a major source of employment, with over 8 crore people employed in this sector. CREDAI National President Boman Irani highlighted the immense potential of the real estate industry in addressing the housing needs of the 40 crore Indians who currently lack access to adequate homes. He emphasized that with the right policies, the sector could generate 7 crore homes in the next 7 years and create 2 crore new jobs.

Irani expressed confidence that the CREDAI recommendations for Budget 2025 would help unlock the true potential of the real estate sector, empowering homebuyers and driving India’s economic ambitions forward. By addressing long-standing issues such as high tax rates on affordable housing and low home loan deduction limits, these measures could drive growth and ensure that India’s housing needs are met more efficiently.

Financial Relief for Middle-Class Homebuyers
Apart from recommending tax cuts for affordable housing projects, CREDAI also proposed an increase in the deduction limits for home loan principal and interest under section 80C and 24(b) of the Income Tax Act. This would offer much-needed financial relief to middle-class individuals who are paying off their home loans. A higher deduction limit would reduce their tax burden, easing the financial strain of homeownership. This could be a crucial step in making homeownership more affordable for a larger segment of the population, especially those in the middle-income bracket.

By proposing these changes, CREDAI is taking proactive steps to not only address the immediate housing challenges in India but also to make homeownership more accessible for all segments of society, particularly the middle-class families who are the backbone of the Indian economy. The Budget 2025 offers a crucial opportunity for the government to bring these much-needed reforms into effect.

For more Real-time Updates, Bookmark https://financesaathi.com

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.