Union Budget 2026: Kolkata Real Estate Sector Seeks Tax Relief and Higher Affordable Housing Cap

As the Union Budget 2026 unveiled on February 1, the real estate community in Kolkata is calling upon the government to bring about reforms in the budget that will be in line with the current market trends. The rising cost of land, construction costs, and compliance costs have affected the affordability of housing.

Call for Revision in Affordable Housing Definition

At present, the price criteria for affordable housing in many cities are outdated and do not correspond to the present-day cost of land and construction. Market players are calling for the government to raise the price ceiling significantly and adjust the norms for the number of units to conform to the present-day pricing trends in urban areas.

Updating this definition could:

1. Expand eligibility for tax benefits
2. Increase housing supply in the mid-income segment
3. Improve project viability for developers
4. Boost buyer sentiment

Demand for Higher Home Loan Interest Deductions

Another key recommendation is enhancing home loan interest deduction limits, particularly for:

1. First-time homebuyers
2. Mid-income families
3. Salaried professionals

Stakeholders argue that higher tax deductions would directly improve affordability and stimulate housing demand, especially in cities experiencing rapid urban expansion.

GST Rationalisation on Under-Construction Property

The sector has also brought to light the concerns related to GST on under-construction properties.

The cost of construction has escalated significantly in the past few years due to the following reasons:

1. Inflation in raw materials
2. Increased costs of compliance
3. Logistics costs

Faster Approvals and Digital Single-Window Clearance

Beyond taxation, there is strong demand for:

1. Faster project approvals
2. Digital single-window clearance systems
3. Simplified regulatory frameworks

Delays in approvals lead to increased project costs, which are subsequently transferred to consumers.

Policy Push for Rental and Integrated Developments

With the pace of urbanization increasing in the eastern part of India, there is a growing focus on:

1. Rental housing policies
2. Mixed-use townships
3. Integrated residential-commercial developments
4. Stronger urban infrastructure investment

Mid-Income Housing Expected to Drive 2026 Growth

Industry watchers also feel that mid-income housing is set to remain the key growth driver in 2026. Supportive tax reforms, infrastructure outlays, and policy clarity could help revive homebuyer confidence and attract long-term capital investments.

Stable and predictable policies in the forthcoming Union Budget could play a crucial role in:

1. Strengthening housing demand
2. Improving project execution timelines
3. Enhancing affordability
4. Supporting sustainable real estate growth in Kolkata and eastern India

By LNN (Liyaans News Network)