NEW DELHI: Finance Minister Nirmala Sitharaman presented the Union Budget 2026–27 on February 1, unveiling a series of initiatives designed to enhance capital recycling, simplify tax compliance, and accelerate urban infrastructure development, benefiting the real estate and construction sectors substantially.
A major highlight was the government’s plan to fast-track the monetization of central public sector enterprise (CPSE) real estate assets through specialized Real Estate Investment Trusts (REITs). Sitharaman noted that REITs have proven to be an effective tool for asset monetization, which would aid in recycling mature public assets, while also generating consistent revenue and unlocking funds for new infrastructure projects.
The budget proposed the launch of a Scheme for Enhancement of Construction and Infrastructure Equipment (CIE) aimed at bolstering domestic manufacturing of advanced high-value equipment. This initiative will address a variety of construction requirements, including lifts for multi-storey buildings, fire-fighting systems, and tunnel-boring machinery for metro and road infrastructure, enhancing project execution speed and efficiency.
On the taxation front, the government announced an income tax exemption for individuals and Hindu Undivided Families (HUFs) derived from compulsory land acquisitions under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, excluding acquisitions under Section 46 of the Act. This initiative is expected to alleviate tax-related conflicts and provide clarity for landowners involved in public infrastructure projects.
Compliance obligations for property transactions with non-residents have also been relaxed. Under the proposed changes, resident individuals or HUFs who purchase immovable property from non-residents will no longer need to obtain a Tax Deduction and Collection Account Number (TAN) for tax deductions at source; instead, these transactions can be reported using PAN, aligning the process with resident-to-resident property transactions.
The government announced a renewed focus on urban development through the introduction of City Economic Regions (CERs), targeting Tier II and Tier III cities as well as temple towns. An allocation of ₹5,000 crore per CER over five years is proposed, to be managed through a reform-linked financing mechanism. This initiative is designed to enhance infrastructure and essential services in emerging urban areas, driving economic growth through agglomeration.
Continued infrastructure enhancements in cities with populations exceeding five lakhs were also reaffirmed, many of which have become vital regional growth centers.
Additionally, the government proposed a minor amendment to the Income-tax Act, 2025, which clarifies that the annual value of a property, or part thereof, can be considered nil for up to two years, allowing property owners greater flexibility.
Niranjan Hiranandani, chairman of NAREDCO, stated that the budget’s emphasis on regional integration, infrastructure-driven urbanization, and policy transparency would promote sustained growth in the real estate sector and bolster its contribution to India’s long-term economic advancement.
