The Union Budget 2025 introduced significant reforms to India’s real estate sector, including an increase in the tax deducted at source (TDS) limit on rent to ₹6 lakh annually. This move is expected to ease tax burdens and stimulate real estate demand. Following the announcement, the Nifty Realty index surged nearly 3%, with companies like Prestige Estates, Phoenix Mills, Macrotech Developers, and Sobha experiencing notable gains. The budget also introduced measures to promote urban development and revitalize stalled housing projects, aiming to boost homeownership and improve rental market efficiency.
The Indian real estate sector received a significant boost from the Union Budget 2025, leading to a nearly 3% surge in the Nifty Realty index. A key highlight was the increase in the tax deducted at source (TDS) limit on rent to ₹6 lakh annually, a move anticipated to ease tax burdens and stimulate real estate demand.
Following the budget announcement, real estate stocks experienced strong gains. Prestige Estates led the charge, soaring nearly 10% to an intraday high of ₹1,490.80. Other notable performers included Phoenix Mills, which rose 5.5%, and Macrotech Developers and Sobha, which gained 4.8% and 4.6%, respectively. DLF, Godrej Properties, Raymond, and Oberoi Realty also advanced over 2% each, reflecting investor optimism about the sector’s growth prospects.
While the affordable housing sector saw fewer direct benefits, the budget is overall pro-growth, infrastructure-driven, and investment-oriented. The focus on middle-class relief, urban development, and connectivity is expected to stimulate real estate demand across various segments, making it an overall progressive and impactful budget.
Key Budget Announcements:
- Increased TDS Limit: The TDS threshold on rent has been raised from ₹2.4 lakh to ₹6 lakh annually. This revision is expected to reduce tax compliance burdens, improve liquidity for landlords, and make the rental market more efficient.
- Tax Exemption for Self-Occupied Properties: Homeowners can now claim tax exemptions on two self-occupied properties, up from one previously. This move is expected to encourage second-home investments, particularly in Tier 2 and 3 cities, promote homeownership, and ease tax pressures on the middle class.
- Urban Development Initiatives: The creation of a ₹1 lakh crore Urban Challenge Fund is set to enhance infrastructure, unlock real estate potential, and transform cities into major growth hubs. This initiative will facilitate planned urbanization and attract significant real estate investments.
- Revival of Stalled Housing Projects: An allocation of ₹15,000 crore to the SWAMIH Fund aims to revive stalled residential projects and ensure the completion of over 1 lakh pending units. This funding will provide much-needed relief to homebuyers, especially in the National Capital Region (NCR), and restore confidence in the housing market.
Overall, the Union Budget 2025 has delivered a positive outlook for the real estate sector, with key measures that boost homeownership, improve rental market efficiency, and promote urban development. While the affordable housing segment did not receive significant direct incentives, the budget remains growth-oriented and investment-focused, setting the stage for long-term real estate expansion in India.
