In fiscal year 2024-25, India’s construction and real estate sector saw several major regulatory changes along with some new and exciting policies. These updates aim to promote sustainability, improve efficiency and boost the overall growth. While some of them might create challenges, but these updates surely open up many new opportunities. Below are the key updates and how they might affect the construction companies:
Key Regulatory Updates:
Green Steel Classification
In December 2024, the Ministry of Steel introduced a system to classify ‘green steel’ based on its carbon emissions. Steel producing less than 2.2 tons of CO₂ per ton is now considered “green steel”. Classifying further, steel with emissions below 1.6 tons earns a “five-star green rating”. This encourages construction companies to use eco-friendly steel and moves towards India’s goal of achieving net-zero emissions by the year 2070.
Daily Fees for Delayed Reporting and Simplified Project Reporting in Gujarat
From January 2025, the Gujarat Real Estate Regulatory Authority (GujRERA) started charging daily fees for late quarterly reports. If builders delay reporting, they must pay ₹400 to ₹1,000 daily based on project costs.
GujRERA also launched a simpler reporting system with the new Form 8. These changes ensure timely reporting and reduce paperwork for developers.
Mandatory Precast Construction in Mumbai
The Maharashtra government plans to mandate precast construction methods for real estate firms in Mumbai to reduce air pollution from on-site building activities. This shift aims to promote cleaner construction practices and improve air quality. Construction companies operating in Mumbai are required to adopt precast techniques in compliance with this regulation.
Implementation of Property Tax Reforms
In August 2024, the Indian government revised the capital gains tax framework for real estate transactions. Taxpayers now have the option to choose between:
- Paying a 20% tax on capital gains after adjusting the purchase price for inflation (indexation).
- Paying a 12.5% tax on capital gains without indexation adjustment.
This change provides flexibility, allowing taxpayers to select the option that minimizes their tax liability based on individual circumstances. For properties purchased after 23rd July 2024, only the 12.5% tax rate without indexation is applicable. This reform aims to simplify the tax system. It has been welcomed by the stakeholders for reducing the tax burden on the property sellers.
Union Budget 2025-26: Key Highlights for Construction and Real Estate
It introduced some major measures to boost the sector:
- Infrastructure Investment: ₹11.21 trillion is allocated for the large-scale projects like smart cities, highways & urban transit. This investment will drive demand for construction materials and services, creating new opportunities for companies.
- Reduced GST and Tax Incentives: GST rates on cement have been reduced from 28% to 18%. And on steel from 18% to 12%. Developers can also claim higher input tax credits. Hence it reduces overall construction costs and supports the goal of affordable housing.
- SWAMIH Fund Expansion: The government has infused around ₹15,000 crores into the SWAMIH fund to complete the stalled housing projects. This offers relief to homebuyers and reviving market confidence.
- Enhanced Credit Access for Contractors: The Credit Guarantee Scheme has been expanded and it offers up to ₹10 crore to mid-sized contractors and ₹5 crore to MSMEs with reduced interest rates and collateral requirements.
- Urban Challenge Fund: A ₹1 lakh crore fund supports the urban development and city growth. Construction companies can now benefit from participating in the infrastructure projects under this initiative.
- Streamlined Approvals: A single-window digital system is being implemented for land acquisition, environmental clearances and municipal permits. Faster approvals will reduce the project delays and also cut down the total operational costs.
- Skilling Initiatives: Over 5 lakh construction workers will receive training in AI-based project management, green construction and automation, all thanks to the fund of ₹5,000 crores allocated for the skill development. This upskilling will improve the workforce productivity as well as overall project quality.
These regulatory updates and budgetary measures show the government’s commitment towards a sustainable, efficient and growth-oriented construction and real estate sector. Industry stakeholders can now capitalize on all the new opportunities and contribute to the nation’s development goals by staying informed and adapting to all these changes.