Union Budget 2026 aims REITs, Tax Relief and City Economic Regions

FM Nirmala Sitharaman, in her Budget speech, cited the real estate sector as one that can grow through infrastructural development. The Union Budget 2026 emphasizes a strategic move for the urbanization of Tier II and III cities. The Finance Minister, presenting the budget for the 9th consecutive time, proposed public capital expenditure of Rs. 12.2 lakh crore. Along with funds for risk probability for a seamless business.

Market experts hope the steps will strengthen execution, and liquidity will boost all segments of Indian real estate. The Budget marks cohesive strategies for strengthening the Indian real estate, including NRIs, infrastructure, and tax concessions.

To encourage regional growth, FM Sitharaman proposed City Economic Regions (CERs) with a budget allocation of Rs. 5,000 crore per region for five years for working on development plans based on challenge mode.

“Cities are India’s engine of growth, innovation and opportunities. We shall now focus on Tier II and Tier III cities, and even temple-towns, which needs modern infrastructure and basic amenities. This budget aims to further amplify the potential of cities to deliver the economic power of agglomerations by mapping city economic regions (CERs) based on their specific growth drivers. An allocation of Rs. 5,000 crore per 5 years is proposed for implementing their plans through a challenge mode with reform-cum-results based financing mechanism” FM Nirmala Sitharaman, Finance Minister said in here Budget speech.

Union Budget 2026 focus on Real Estate Sector growth via Technological Advancement

The growing demand for efficient residential properties led to the introduction of another important reform. FM Nirmala Sitharaman, the only longest serving woman finance minister of India to present a budget for the ninth consecutive time, proposed a relief. A scheme for the Enhancement of Construction and Infrastructure Equipment (CIE) is introduced in Budget 2026.

“A scheme for enhancement of construction and infrastructure equipment will be introduced to strengthen domestic manufacturing of high-value, technology-advanced CIE. This can range from firefighting equipment to lifts to tunnel boring machines,” in her Budget 2026 speech FM Nirmala Sitharaman said.

It is aimed to empower domestic manufacturing of expensive and technologically advanced equipment. Several goods, including lifts for high-rise buildings, will come under this proposal. Also, it is an aid for infrastructure development as tunnel-boring machinery falls under the umbrella.

Budget 2026 simplify Concrete Structure Development

To overcome financial constraints, FM Sitharaman proposes to set up the Infrastructure Risk Guarantee Fund. It will boost developers’ confidence by providing prudentially calibrated credit guarantees to lenders. She also said that the Government will recycle assets of central public sector enterprises by establishing dedicated real estate investment trusts (REITs).

 “To strengthen the confidence of private developers regarding risks during infrastructure development and construction phase, I propose to set up an Infrastructure Risk Guarantee Fund to provide prudently calibrated partial credit guarantees to lenders,” Finance Minister in the Budget speech 2026 said.

Budget 2026 and Tax for Indian Real Estate

Individuals and Hindu Undivided Family (HUF) get tax exemption on income arising from mandatory land acquisition. It is proposed under the Right of Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Exempting acquisitions under Sector 46 of the Act. The proposal is likely to curtail tax disagreements, along with fairness to land owners affected by public infrastructure projects.

The Union Budget 2026-27: Tax obligations are relaxed for property transactions, including NRIs (Non-Resident Indians). Now, the purchase of an immovable asset from a Non-Resident Indian by any individual or Hindu Undivided Family (HUF) is not required to obtain a TAN, i.e., Tax Deduction and Collection Amount Number, for tax deduction at source.

Rather, the purchase can be listed via PAN to complete the property purchase procedure from NRIs.

Market experts feel the Union Budget 2026 strongly focus on Infrastructure Development

“The focus on selective opportunities in tier 2 and tier 3 growth corridors, and connectivity in urban economic regions, provides a supportive backdrop for demand in residential and logistics markets over the medium term. However, disappointingly, the Budget does not introduce any real-estate specific incentives, especially to boost affordable housing in India, which has already been a cause of concern for the sector.”

Anshul Jain, Chief Executive - India SEA, MEA, & APAC Office and Retail, Cushman & Wakefield, said development of tier 2 and tier 3 cities will act as a growth lever for Indian real estate.

“As capacity tightens in select Tier I locations, occupiers, particularly GCCs and start-ups, are evaluating Tier II cities, supported by access to emerging talent pools, relatively lower real estate costs, improving infrastructure and a better quality-of-life proposition.”