Key Takeaways
NAREDCO has proposed major reforms ahead of Union Budget 2026 to revive India’s real estate sector.
Key demands include increasing home loan interest deduction limits and removing the five-year project completion rule.
Revival of the Income-Tax Settlement Commission could reduce long tax disputes and unlock large amounts of capital.
Affordable housing definition may be revised from ₹45 lakh to ₹75–80 lakh to reflect current market realities.
Granting industry or infrastructure status to real estate can improve funding access and project completion.
Rental housing is being pushed as essential infrastructure to meet urban housing needs.
NAREDCO’s Budget 2026 Wishlist Explained
India’s real estate sector plays a major role in the economy. It contributes around 7–8% to India’s GDP and provides employment to nearly 19% of the country’s workforce. As the country approaches Union Budget 2026, the sector is facing important challenges such as rising home prices, stalled projects, long tax disputes, and a shortage of affordable housing.
On January 22, 2026, NAREDCO submitted a detailed set of recommendations to the Ministry of Finance to address these issues and support the government’s vision of “Housing for All.” The proposals, led by Chairman Niranjan Hiranandani and President Parveen Jain, focus on tax relief, policy reforms, and better financing to revive growth and improve buyer confidence.
One of NAREDCO’s key demands is to increase the home loan interest deduction under Section 24(b) of the Income Tax Act. Currently, homebuyers can claim a maximum deduction of ₹2 lakh per year on interest paid for self-occupied houses.
This limit has remained unchanged for many years, even though property prices, construction costs, and home loan EMIs have risen sharply. NAREDCO has proposed increasing this limit to ₹5 lakh or more, which would reduce the tax burden on middle-class buyers and make home ownership more affordable.
NAREDCO has also highlighted the problem caused by the five-year completion rule, which requires a house to be completed within five years of taking a loan in order to claim full tax benefits.
In reality, many projects get delayed due to regulatory approvals, legal issues, or unexpected events. When this happens, buyers lose their tax deductions even though the delay is not their fault. Removing this rule would protect homebuyers and ease financial pressure on both buyers and developers.
Another major recommendation is the revival of the Income-Tax Settlement Commission (ITSC), which was discontinued in February 2021. Earlier, this body allowed businesses to resolve tax disputes through one-time settlements, avoiding long court cases.
After its closure, many real estate developers have been stuck in tax litigation for years, with large sums of money locked up in disputes related to GST, income recognition, and compliance issues.
NAREDCO believes that reviving the ITSC would reduce litigation, improve transparency, and free up ₹50,000 crore to ₹1 lakh crore for reinvestment into housing projects.
NAREDCO has also asked the government to redefine affordable housing, as the current limit of ₹45 lakh no longer reflects market realities. In most cities, it is very difficult to build quality homes within this price.
The council has suggested raising the affordable housing limit to ₹75–80 lakh, which would better match actual demand in urban areas. This change would allow buyers to access lower interest home loans and encourage developers to build more homes in the price range where most buyers are active.
To further support the sector, NAREDCO wants industry or infrastructure status to be granted to real estate. This would make it easier for developers to access funding at lower costs, receive tax benefits, and get faster approvals.
The proposal also includes using government land for mid-income housing through public-private partnerships and increasing funding for SWAMIH Fund 2.0 to help complete stalled projects. In addition, NAREDCO has suggested reducing tax rates for non-corporate developers to 25% and capping individual income tax rates at 30%, which would increase disposable income and housing demand.
Rental housing is another important focus area in NAREDCO’s wishlist. With home prices rising in metro cities, renting has become a necessity for many families. NAREDCO proposes treating rental housing as essential infrastructure and offering incentives such as GST relief, depreciation benefits, and REIT-based funding structures.
Public-private partnerships could help create millions of rental homes over the next few years, reducing pressure on ownership housing in large cities.
Final thought
Overall, NAREDCO believes that if these measures are included in Budget 2026, they could significantly improve affordability, reduce disputes, boost investment, and accelerate housing supply. These reforms have the potential to unlock growth across construction, banking, and allied industries, while moving India closer to its goal of providing safe and affordable housing for all.
Frequently Asked Questions (FAQs)
1.What is NAREDCO?
NAREDCO (National Real Estate Development Council) is a self-regulatory body that represents real estate developers across India and works closely with the government on policy reforms for the housing sector.
2.Why has NAREDCO submitted recommendations for Budget 2026?
NAREDCO submitted its Budget 2026 wishlist to address major challenges in the real estate sector such as rising home prices, stalled projects, high tax burdens, long tax disputes, and shortage of affordable housing. The aim is to revive demand and support the government’s “Housing for All” mission.
3.What changes has NAREDCO suggested for home loan tax benefits?
NAREDCO has proposed increasing the home loan interest deduction under Section 24(b) from the current ₹2 lakh to ₹5 lakh or more for self-occupied houses. This would reduce the tax burden on homebuyers and make home ownership more affordable.
4.What is the five-year completion rule, and why does NAREDCO want it removed?
The five-year rule requires a house to be completed within five years of taking a home loan to claim full tax benefits. NAREDCO wants this rule removed because many projects get delayed due to reasons beyond buyers’ control, causing them to lose tax deductions unfairly.
5.Why does NAREDCO want the Income-Tax Settlement Commission revived?
The Income-Tax Settlement Commission earlier helped businesses resolve tax disputes quickly through one-time settlements. NAREDCO believes reviving it would reduce long-pending litigation, improve transparency, and free up ₹50,000 crore to ₹1 lakh crore for reinvestment in housing projects.
6.How does NAREDCO want affordable housing to be redefined?
NAREDCO has suggested increasing the affordable housing price limit from ₹45 lakh to ₹75–80 lakh. This change reflects current market prices and would help more buyers access lower interest home loans while encouraging developers to build homes where demand is highest.
7.What does industry or infrastructure status for real estate mean?
Granting industry or infrastructure status would allow real estate developers easier access to funding, lower borrowing costs, tax benefits, and faster approvals. This could help complete stalled projects and increase housing supply.
8.What role does rental housing play in NAREDCO’s proposals?
NAREDCO wants rental housing to be treated as essential infrastructure. It has proposed tax incentives, GST relief, depreciation benefits, and REIT-based funding to promote large-scale rental housing, especially in metro cities.
9.How can these proposals impact the Indian economy?
If implemented in Budget 2026, these reforms could improve housing affordability, boost investment, reduce legal disputes, create jobs, and strengthen allied sectors like banking, construction, and infrastructure.
