India's Middle Class Deserves Better: Reinstate Real Estate Indexation Benefits, Says Mohandas Pai
Veteran business leader Mohandas Pai urges the government to reconsider its decision to scrap indexation benefits for real estate transactions, citing the negative impact on the middle class.
Real EstateIndexation BenefitsMiddle ClassUnion BudgetMohandas PaiReal Estate NewsJul 25, 2024
According to Pai, the government's decision to remove indexation benefits is flawed and does not reflect the actual market data. He pointed out that the Finance Ministry's claim that real estate prices have gone up 12%-16% every year is unrealistic, citing a report by Kotak that suggests a more modest 5%-7% annual increase.
Pai urged the government to consider the sentiments of its supporters, who are struggling to make ends meet amid a deteriorating quality of life. He stressed that the government needs to make a political decision to reinstate indexation benefits until April 1, 2024, to alleviate the burden on the middle class.
The veteran business leader also criticized the lack of trust in India's tax system, citing frequent changes without adequate discussion. He argued that the government should grandfather existing benefits and make changes prospective, as was done by former Finance Minister Arun Jaitley.
On the financial implications of a potential rollback, Pai said that the additional tax revenue generated by the 12.5% unified rate would be relatively small compared to the overall tax collected. He argued that indexing real estate investments until the specified date would not significantly impact government revenue but would greatly benefit taxpayers.
Aarin Capital's Mohandas Pai is a well-known business leader and former CFO of Infosys. He has been vocal in his criticism of the government's decision to scrap indexation benefits for real estate transactions.
Aarin Capital is a privately-held investment firm that focuses on investing in early-stage companies. The firm was founded by Mohandas Pai and is headquartered in Bangalore, India.
CNBC-TV18 is a leading business news channel in India that provides real-time updates on the stock market, business news, and market analysis.
Frequently Asked Questions
What is the main issue with the government's decision to scrap indexation benefits for real estate transactions?
The main issue is that it will add to the burden of the middle class, who are already struggling with high inflation and rising monthly installments.
What is the government's rationale for removing indexation benefits?
The government claims that real estate prices have gone up 12%-16% every year, but this is disputed by market data and experts like Mohandas Pai.
Why is Mohandas Pai advocating for the reinstatement of indexation benefits?
Pai believes that the government needs to consider the sentiments of its supporters, who are struggling to make ends meet amid a deteriorating quality of life.
What is the impact of the government's decision on trust in India's tax system?
The frequent changes without adequate discussion have led to a lack of trust in India's tax system, according to Pai.
What is the potential financial impact of reinstating indexation benefits?
The additional tax revenue generated by the 12.5% unified rate would be relatively small compared to the overall tax collected, and indexing real estate investments until the specified date would not significantly impact government revenue.
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