New Delhi, Aug 7 (PTI) Property owners are set to benefit from the government’s decision to offer a choice between a new 12.5% long-term capital gains (LTCG) tax rate and the old 20% rate with indexation benefits for assets bought before July 23. According to industry experts, this move is expected to boost market sentiment.
Industry Reactions to the Amendment
Boman Irani, President of the realtors’ apex body CREDAI, welcomed the recent changes in the LTCG tax and indexation benefits. Finance Minister Nirmala Sitharaman had initially proposed a 12.5% LTCG tax rate in her 2024-25 budget but without indexation benefits. Following criticism, an amendment was made to give taxpayers the option to choose between the two rates. Indexation benefits allow taxpayers to adjust the cost of property based on inflation.
Balanced Approach and Investor Relief
G Hari Babu, President of NAREDCO, praised the government’s balanced approach. He highlighted that this decision provided significant relief to property owners and investors who were worried about losing indexation benefits. This option is expected to address the concerns of long-term investors who might have faced higher taxes without indexation. Babu also noted that this move could help reduce cash transactions and curb the resurgence of black money in the real estate sector.
Positive Impact on Homeowners and Homebuyers
Anuj Puri, Chairman of Anarock, emphasized the profound impact this amendment will have on homeowners and aspiring homebuyers. Housing.com CEO Dhruv Agarwala added that this decision ends the confusion and speculation caused by the initial budget announcement, preventing potential negative impacts on market sentiment and growth in India’s second-largest employment sector. He also mentioned that while the benefit won’t apply to future transactions, it gives taxpayers more time to plan their asset sales to maximize benefits, further encouraging investment in housing.
Encouraging Real Estate Investment
Various industry leaders, including PropEquity founder Samir Jasuja and Krisumi Corporation MD Mohit Jain, have echoed the positive sentiments. Jasuja believes this is a positive development for the real estate sector, addressing concerns about higher taxes without indexation. Jain noted that this amendment allows property owners to plan their sales and strategically choose the lower tax rate. NeoLiv founder Mohit Malhotra described the move as a progressive step demonstrating the government’s commitment to supporting homeowners and expanding the housing market.
Tailored Benefits for Different Scenarios
Anshul Jain, Chief Executive for India and SE Asia at Cushman & Wakefield, pointed out that the industry believed the new 12.5% rate without indexation would increase tax burdens. This amendment provides the government time to reassess its impact holistically. Knight Frank India CMD Shishir Baijal highlighted that the 12.5% rate could be beneficial if a property’s value has outpaced inflation, while indexation could be more advantageous for properties with an appreciation closer to the inflation rate.
Ritesh Mehta of JLL noted that the amendment offers relief, particularly to the middle class, who are sensitive to tax policy changes. Bhavesh Kothari, Founder & CEO of Property First Realty, and Vijay Harsh Jha, founder and CEO of VS Realtors, both expressed optimism that this policy change would enhance confidence in real estate investments and empower taxpayers with more choices.
This amendment is expected to foster increased liquidity and optimism in the real estate sector, ensuring that property transactions continue smoothly and market confidence remains high.
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