Union Budget 2026: What Can the Indian Real Estate Sector Expect?

Introduction

The Indian real estate sector plays a crucial role in economic growth, employment generation, and infrastructure development. As the nation looks forward to the Union Budget 2026, developers, investors, homebuyers, and real estate professionals are keenly watching for policy announcements that can revive demand, ease liquidity, and strengthen long-term sustainability.

In this blog, we explore key expectations from Budget 2026 for the real estate sector and how proposed reforms may shape the future of housing and commercial development in India.

1. Tax Relief for Homebuyers to Boost Demand

One of the most anticipated reforms in Budget 2026 is enhanced tax benefits for homebuyers.

Expected Announcements:

• Increase in deduction limits under Section 24(b) on home loan interest
• Higher cap on Section 80C for principal repayment
• Additional tax incentives for first-time homebuyers

Impact: Improved affordability and renewed housing demand, particularly in mid-income and affordable segments.

2. Strong Push for Affordable Housing

Affordable housing remains a priority for the government under its "Housing for All" vision.

Budget 2026 Expectations:

• Extension or revival of tax benefits for affordable housing projects
• Interest subsidy support for EWS and LIG categories
• Faster approvals and regulatory relaxations for affordable housing projects

Impact: Boost in project launches, improved housing supply, and wider homeownership.

3. Infrastructure Spending to Drive Realty Growth

Increased allocation to infrastructure directly fuels real estate growth.

Expected Focus Areas:

• Metro rail expansion
• Expressways, highways, and logistics corridors
• Smart cities and urban redevelopment projects

Impact: Higher land values, increased housing demand in peripheral areas, and growth in commercial real estate hubs.

4. Industry Status for Real Estate Sector

Granting industry status to real estate has been a long-standing demand.

Possible Benefits:

• Easier access to institutional funding
• Lower borrowing costs
• Improved transparency and standardisation

Impact: Better liquidity management for developers and faster project completion.

5. Rationalisation of GST on Real Estate

The sector continues to seek clarity and relief under the GST framework.

Budget 2026 Expectations:

• Input tax credit (ITC) benefits for residential projects
• GST rate rationalisation for under-construction properties
• Simplified compliance structure

Impact: Lower project costs and improved pricing transparency for buyers.

6. Support for Stressed & Stalled Projects

Thousands of stalled projects affect buyer confidence.

Expected Measures:

• Special funding windows for stressed projects
• Relaxation of compliance norms for legacy developments
• Incentives for project completion and revival

Impact: Revival of stuck inventory and restoration of trust in the sector.

7. Growth of Commercial & Rental Housing

With changing work patterns and urban migration, Budget 2026 may address new-age real estate needs.

Likely Announcements:

• Incentives for rental housing and co-living projects
• Policy support for office spaces, warehousing, and data centres
• Tax benefits for REITs and commercial investors

Impact: Diversified real estate growth beyond residential housing.

8. Strengthening Regulatory Framework & Transparency

 Regulatory reforms remain critical for long-term sustainability.

Expected Reforms:

• Stronger enforcement of RERA provisions
• Increased digital monitoring and disclosures
• Faster dispute resolution mechanisms

Impact: Enhanced buyer confidence and improved ease of doing business.

Conclusion

The Union Budget 2026 is expected to focus on affordability, liquidity, infrastructure expansion, and regulatory stability for the real estate sector. If key expectations are met, the sector could witness renewed growth, increased investment, and stronger consumer confidence.

For developers and real estate professionals, aligning business strategies with upcoming policy changes will be critical to long-term success.