As India looks ahead to the Union Budget 2026, the real estate sector, a cornerstone of the nation’s economy, is rife with anticipation. In Kolkata, a city grappling with its unique blend of heritage and modernization, real estate developers are pinning their hopes on significant policy reforms. Faced with escalating construction costs and shifting buyer sentiments, the city’s realtors are advocating for crucial changes, primarily centered on tax relief for homebuyers and a pragmatic revision of the affordable housing definition to rejuvenate market demand.
The sentiment on the ground is clear: the current economic landscape necessitates a policy overhaul to sustain growth and make housing accessible. Developers argue that measures to boost the purchasing power of homebuyers are not just beneficial for the sector but essential for the broader economy, given real estate’s vast multiplier effect on employment and ancillary industries.
The Core Demand: Enhancing Homebuyer Tax Relief
A primary expectation from Budget 2026 is the enhancement of tax benefits for homebuyers under the Income Tax Act. Currently, Section 24(b) allows for a deduction of up to ₹2 lakh on home loan interest. However, industry bodies like CREDAI have repeatedly pointed out that this limit, set years ago, has become inadequate given the significant rise in property values and interest rates.
Kolkata’s developers are urging the government to increase this deduction limit to at least ₹5 lakh. Such a move would:
- Increase Disposable Income: A higher tax deduction would leave more money in the hands of homebuyers, effectively lowering the cost of borrowing and making EMIs more manageable.
- Stimulate Demand: This financial relief would particularly benefit the salaried middle class, a key demographic in the housing market, encouraging them to invest in property.
- Boost Premium Housing: While stimulating the entire market, a higher deduction limit would especially invigorate the mid-range and premium housing segments, which have seen costs rise steeply.
For more details on the existing tax laws, you can refer to the official Income Tax Department website.
Redefining ‘Affordable Housing’: A Critical Need for Metros
Perhaps the most pressing issue for developers in metropolitan cities like Kolkata is the outdated definition of ‘affordable housing.’ Currently, a residential unit qualifies as affordable if it costs up to ₹45 lakh and measures up to 60 square meters in metros. Developers argue that this price cap is no longer viable in major urban centers due to soaring land acquisition and construction material costs.
In a city like Kolkata, finding a property that meets these criteria within respectable locations is a significant challenge. Consequently, both developers and potential buyers are unable to avail the benefits associated with the affordable housing tag, such as lower GST rates. The industry’s plea is to revise this cap to a more realistic figure, potentially between ₹75 lakh and ₹1 crore for metro cities. This adjustment would align the policy with market realities and truly help in achieving the ‘Housing for All’ mission.
A report by real estate consultants often highlights this disconnect. As noted by industry experts in outlets like The Economic Times, recalibrating this definition is crucial for the health of the housing market.
Boosting Demand Through Industry-Wide Support
Beyond individual tax benefits, Kolkata’s real estate sector is looking for broader measures to stimulate demand and ease operational pressures. The rising costs of essential materials like steel, cement, and labour have squeezed developer margins and pushed property prices upward, acting as a deterrent for potential buyers.
Key recommendations for Budget 2026 include:
- GST Rationalization: The real estate sector has long advocated for the rationalization of the Goods and Services Tax (GST). A major point of contention is the inability for developers to claim input tax credit (ITC) on construction materials under the current regime, which inevitably adds to the final cost for the homebuyer. A return to a GST structure with ITC is a prominent demand.
- Industry Status: The long-standing demand for granting ‘industry status’ to the real estate sector continues to be a focal point. This would enable developers to access financing from banks and financial institutions at more competitive interest rates, thereby reducing project costs and dependency on less formal funding sources.
- Single-window Clearance: A streamlined, single-window clearance system for real estate projects remains a dream for many developers. Such a mechanism would cut down project timelines, reduce anachronistic delays, and curb corruption, leading to faster delivery and lower overheads.
The Path Forward for Kolkata’s Real Estate
The expectations of Kolkata’s real estate developers from Union Budget 2026 are not just a wishlist for sectoral gain; they represent a roadmap for sustainable urban development. By addressing the challenges of high taxation, unrealistic price caps, and rising input costs, the government can unlock immense potential. These reforms would not only make housing more accessible for citizens but also provide a significant impetus to economic growth, job creation, and urban infrastructure development.
As stakeholders await the budget announcement, the hope is that policymakers will recognize the pivotal role of the real estate sector and introduce measures that foster a resilient, transparent, and buyer-friendly market. For Kolkata, a city at the cusp of major growth, these policy changes could be the catalyst needed to revive demand and build a vibrant future. For further insights into the national real estate outlook, reports from organizations like CREDAI provide comprehensive analysis and pre-budget recommendations.
