NEW DELHI: The Union Budget 2026-2027, presented by Finance Minister Nirmala Sitharaman on February 1, announced a series of policy measures aimed at improving capital recycling, easing tax compliance and accelerating urban infrastructure development, providing multiple tailwinds for the real estate and construction sectors.A major announcement was the government’s proposal to accelerate revenue generation central public sector undertaking (CPSE) real estate assets through dedicated Real Estate Investment Trusts (REITs). Sitharaman said REITs have emerged as a successful asset generation tool and this move would help recycle mature public assets while generating recurring income and unlocking capital for new infrastructure development.
The budget also proposed the introduction of a Scheme for the improvement of construction and infrastructure equipment (CIE) to strengthen domestic production of high-quality and technologically advanced equipment. The plan will cover a wide range of construction needs, including elevators for multi-storey residential buildings, firefighting equipment and tunnel boring machines for metro and road infrastructure, supporting faster and more efficient project implementation.On the tax front, the government has announced an income tax exemption for individuals and Hindu Undivided Families (HUFs) on income arising out of compulsory acquisition of land under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013with the exception of acquisitions pursuant to Article 46 of the Act. This move is expected to reduce tax-related disputes and provide clarity to landowners affected by public infrastructure projects.
Compliance requirements were also relaxed for real estate transactions involving non-residents. Under the proposed amendment, resident natural persons or HUFs purchasing real estate from non-residents will no longer be required to Account number for tax deduction and collection (TAN) for withholding tax at source. Instead, such transactions can be reported using PAN, aligning them with the procedures followed for real estate transactions between residents.
Urban development received a new impetus with the announcement of Economic regions of cities (CERs), focusing on Tier II and Tier III cities as well as temple cities. The government proposed an allocation of ₹5,000 crore per CER over a period of five years, which would be deployed through a reform-linked, results-oriented financing mechanism. The initiative aims to strengthen infrastructure and basic services in emerging urban centers and leverage agglomeration-driven economic growth.
The Budget also reaffirmed the continued development of infrastructure in cities with a population of over five lakh, many of which have developed into major regional growth centres.
Among other changes, the government has a minor amendment in the Income Tax Act, 2025clarifying that the annual value of a property or part thereof can be considered zero for up to two years, providing flexibility to property owners.
Niranjan Hiranandani, Chairman, NAREDCO, said the Budget’s focus on regional integration, infrastructure-led urbanization and policy clarity would support sustainable growth in the real estate sector and strengthen its role in India’s long-term economic expansion.
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