Kolkata Realtors Call for Tax Relief and Updated Affordable Housing Cap in Budget 2026 to Boost Demand
Real estate developers in Kolkata are calling on the central government to utilize the upcoming Union Budget to adjust housing policies in response to increasing land and construction costs. They are advocating for enhanced tax benefits for homebuyers and a long-overdue revision of the affordable housing definition. These changes are seen as essential to stimulate demand, particularly in the mid-income segment. With the Budget scheduled for presentation on February 1, industry leaders believe that measures such as revising price caps for affordable homes and streamlining the Goods and Services Tax (GST) on under-construction properties could significantly boost sales momentum.
Industry Leaders Advocate for Policy Revisions
Sushil Mohta, president of CREDAI West Bengal and chairman of Merlin Group, emphasized the need for reforms that align with current market conditions. He stated that revisiting the definition of affordable housing, rationalizing housing loan interest deductions, and simplifying GST rates would greatly enhance affordability and demand, particularly for middle-income homebuyers. Mohta also highlighted the importance of a policy push for rental housing and broader access to formal housing finance, especially in the context of rapid urbanization.
Mahesh Agarwal, managing director of Purti Realty, echoed these sentiments, stressing the necessity of ongoing policy support through tax rationalization and increased infrastructure spending. He suggested that a reassessment of affordable housing price limits, in light of rising land and construction costs, along with adjustments to GST on under-construction properties, would improve affordability. Agarwal also pointed out that a simpler tax framework and incentives for first-time buyers could stabilize the market and expedite project execution.
Concerns Over Rising Construction Costs
Merlin Group’s managing director, Saket Mohta, raised concerns about the sharp rise in construction costs since the implementation of GST in 2017. He called for further rationalization of tax structures and proposed increasing the affordable housing price cap from Rs 45 lakh to approximately Rs 80–90 lakh, along with expanding unit size norms. Mohta believes that mid-income housing will be a key demand driver moving into 2026, and that supportive tax and policy measures are vital for sustaining growth in the sector.
Eden Realty’s managing director, Arya Sumant, stressed the need for the Budget to balance fiscal discipline with growth-oriented reforms. He advocated for higher home loan interest deductions for mid-income and first-time buyers, an updated definition of affordable housing, GST rationalization, and expedited approvals to enhance project viability and speed to market. Sumant also noted that sustained investment in urban infrastructure would be crucial for unlocking demand across both residential and commercial segments.
Focus on Integrated Developments
Sahil Saharia, CEO of Bengal Shristi Infrastructure Development Ltd, suggested that the policy focus should shift towards large, integrated developments. He proposed support for mixed-use townships, rental housing, and commercial hubs, along with faster clearances and the implementation of digital single-window mechanisms. Such initiatives could foster self-sustaining urban ecosystems and improve execution efficiency in the real estate sector.
Developers believe that clear and stable policy signals in the upcoming Budget could restore homebuyer confidence, attract long-term capital, and ensure sustainable growth for the real estate sector in eastern India. As the industry awaits the government’s decisions, the emphasis remains on creating a conducive environment for both buyers and developers alike.
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