New Delhi: Leaders within the real estate sector have lauded the proposed amendment by Finance Minister Nirmala Sitharaman in the Finance Bill, which offers significant relief on capital gains tax for property transactions.
These industry leaders have described this move as a positive step forward, asserting that it will encourage investment in the real estate sector and also stimulate sales across various housing segments.
"The government's initiative to provide taxpayers with the option to calculate taxes at either a lower rate of 12.5 percent without indexation or a higher rate of 20 percent with indexation for real estate transactions is a notable advancement," stated Niranjan Hiranandani, Chairman of the Hiranandani Group and Chairman of NAREDCO.
Finance Minister Nirmala Sitharaman introduced an amendment in the Finance Bill on Tuesday, proposing a reduction in the capital gains tax for property transactions. This amendment allows taxpayers to choose between a lower tax rate of 12.5 percent without indexation or a higher rate of 20 percent with indexation, provided the property is acquired before July 23, 2024, the date on which the Union Budget was presented in the Lok Sabha.
Hiranandani further elaborated, "By offering taxpayers the flexibility to select the lower tax burden between the new and existing schemes, this amendment is expected to drive investment and boost sales across various housing segments. We extend our gratitude to the Finance Minister for her forward-thinking approach in implementing these beneficial measures."
Ritesh Mehta, Senior Director/Head, North, East & West, Residential Services, India, JLL, also expressed his support for the government's move, stating, "This is a favorable development by the government, which will not dampen the prevailing optimistic sentiment. This amendment is particularly beneficial for the middle-class population, who are particularly sensitive to changes in tax policies and financial structures. It is anticipated to maintain the cycle of selling and buying, fostering greater liquidity and optimism within the Real Estate sector."
Following the amendment, taxpayers will have the option to choose between the two schemes for tax computation, with the lower rate scheme being selected. The date for the calculation of capital gains has been set at July 23, 2024, marking a significant departure from the previous cut-off date of 2001, which had raised concerns regarding its impact on long-term property owners.
This amendment extends its reach to include not only real estate transactions but also to unlisted equity transactions conducted before July 23, 2024. Such transactions will now be subject to a lower long-term capital gains tax rate of 10 percent, as opposed to the budget proposal of 12.5 percent.
