Budget 2026: Real estate players seek tax relief to boost mid-income housing

As Union Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026 on February 1, real estate industry leaders are calling for targeted measures to improve housing affordability, particularly for mid-income buyers. They are also seeking policy support to rebalance supply and sustain long-term urban growth.

Developers and consultants say the housing cycle is entering a transition phase, with demand shifting away from luxury-led momentum toward value-driven segments, making fiscal support for affordability and infrastructure critical in the upcoming budget.

Tanuj Shori, founder and CEO of Square Yards, said the market is at an inflection point where policy alignment can determine the durability of growth. "The Indian housing market is clearly moving out of a luxury-led upcycle and into a more value-driven phase, with the mid-income segment poised to anchor growth as premium demand begins to stabilise," Shori said.

He said Budget 2026 should focus on easing affordability pressures through direct tax measures and urban investment. "From the 2026 Union Budget, one should expect a sharper focus on improving affordability through enhanced tax relief for mid-income homebuyers, higher interest deduction limits and sustained investment in urban infrastructure," he said.

Shori also flagged supply-side imbalances, noting that new launches have been skewed toward higher ticket sizes. "Equally important is policy support that encourages supply in the affordable and mid-market segments, as recent launches have been disproportionately skewed towards higher ticket sizes," he said, adding that such measures could "strengthen end-user demand, improve price-to-income dynamics and support a more balanced and sustainable phase of urban housing growth."

Badal Yagnik, CEO and Managing Director at Colliers India, said the upcoming budget would be closely watched for signals on equitable development and long-term competitiveness. "Budget 2026 is expected to prioritise growth across economic sectors and usher in equitable real estate development through policy incentives and tax rebates," Yagnik said.

He added that the budget could play a balancing role between fiscal discipline and growth. "The Union Budget is likely to serve as a guiding tool balancing fiscal discipline alongside growth - keeping India globally competitive in key sectors including real estate," he said.

Yagnik said revisiting affordable housing definitions was essential to reflect ground realities, especially in large cities. "Standardization and revision of affordable housing criteria to reflect price reality of Tier I cities can provide a demand-side boost to residential real estate," he said.

He also underlined the need for infrastructure-led supply expansion. "Also, supply side push through infrastructure augmentation and capacity building can trigger long-term growth levers across real estate segments," Yagnik said.

Pointing to capital market reforms, he said broader participation could be encouraged through listed real estate vehicles. "Furthermore, real estate democratisation and retail investor participation can be encouraged by making REITs and SM-REITs more attractive," he said.

Yagnik said sustainability and urban planning must also remain central as the sector scales up. "While Indian real estate is at the cusp of an accelerated growth trajectory across asset classes, the upcoming budget should incentivise sustainability adoption in built structures and holistically revitalise urban development plans," he said.