Budget 2024: Impact on Real Estate Sector and Property Owners
The removal of indexation benefit will increase the tax incidence on property sale, especially for older properties, while the reduction in long-term capital gains tax rate may boost investments.
Budget 2024Real EstateProperty TaxIndexation BenefitCapital Gains TaxReal EstateJul 23, 2024
On the positive side, the reduction in long-term capital gains tax rate from 20% to 12.5% is expected to boost investments in the real estate sector over the near to medium term. However, the removal of indexation benefit may offset this gain, particularly for investors holding assets such as immovable property for a considerable duration.
Experts believe that the Centre's move to persuade state governments to reduce stamp duties, especially for women home-owners, can have a positive impact on the sector. The government's plan to provide additional one crore housing units to urban poor and middle-class families under the Pradhan Mantri Awas Yojana (PMAY) scheme, with an incremental budgetary allocation of ₹2.2 lakh crore over the next 5 years, will sustain the growth momentum in the affordable housing segment.
Furthermore, the government has proposed that income from letting out of a house or part of the house by the owner, shall not be charged under the head 'profits and gains of business or profession' and will be chargeable to tax under the head 'income from house property' only. This is expected to simplify the tax regime for property owners.
Additionally, the government has announced plans to facilitate rental housing with dormitory type accommodation for industrial workers in PPP mode with viability gap funding support and commitment from anchor industries. This is expected to open doors to many large real estate players, including foreign investors, to establish large residential complexes and ensure smooth renting.
Information
CRISIL Ratings is a leading credit rating agency that provides ratings and research on the Indian economy and various sectors. Khaitan & Co is a leading law firm that provides legal services to various clients, including those in the real estate sector.
CRISIL Ratings, a leading credit rating agency, has expertise in providing ratings and research on the Indian economy and various sectors. The agency's director, Gautam Shahi, has extensive experience in analyzing the real estate sector. Khaitan & Co, a leading law firm, provides legal services to various clients, including those in the real estate sector. The firm's executive director, Vinita Krishnan, has expertise in tax and real estate laws.
Frequently Asked Questions
What is the impact of Budget 2024 on the real estate sector?
The removal of indexation benefit will increase the tax incidence on property sale, especially for older properties, while the reduction in long-term capital gains tax rate may boost investments.
How will the removal of indexation benefit affect property owners?
The removal of indexation benefit will increase the tax incidence on property sale, making it a costly affair for sellers, particularly those holding older properties.
What is the government's plan for affordable housing?
The government has announced plans to provide additional one crore housing units to urban poor and middle-class families under the Pradhan Mantri Awas Yojana (PMAY) scheme, with an incremental budgetary allocation of ₹2.2 lakh crore over the next 5 years.
How will the rental housing policy benefit the real estate sector?
The government's plan to facilitate rental housing with dormitory type accommodation for industrial workers in PPP mode with viability gap funding support and commitment from anchor industries is expected to open doors to many large real estate players, including foreign investors, to establish large residential complexes and ensure smooth renting.
What is the impact of the budget on women home-owners?
The government's plan to persuade state governments to reduce stamp duties, especially for women home-owners, can have a positive impact on the sector.
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