Union Budget 2024: A Mixed Bag for Real Estate Sector
The Union Budget 2024 brings a mixed bag of changes for the real estate sector, with a focus on infrastructure development and adjustments to property taxes. Let's delve deeper into these key announcements and their potential impact.
Real EstateUnion Budget 2024Infrastructure DevelopmentProperty TaxesCapital GainsReal EstateJul 23, 2024
One of the key changes is the standardization of the Long Term Capital Gains (LTCG) tax rate applicable on the sale of all financial and non-financial assets, including properties, at 12.5%, without any indexation benefit. Indexation is a tool used by governments to adjust a price of one item based on changes in the inflation rate. The removal of indexation does not necessarily mean one may have to pay more tax when selling a property. In fact, the new regime offers a 7.5% reduction in tax applicable on profits.
The Union Budget 2024 has allocated INR 11.1 trillion crore for capital expenditure, representing 3.4% of GDP. This infrastructure boost will bring about improved connectivity, increase jobs, housing needs, and thereby tremendously increase the scope of real estate development across all sectors.
The PM Awas Yojana-Urban 2.0 aims to deliver one crore houses for the urban poor, backed by an allocation of INR 10 trillion crore. This significant investment underscores the government's commitment to addressing the housing needs of a large segment of the population.
The budget also encourages states to adopt a two-pronged approach to stamp duty, a tax levied on property purchases. The government suggests that states moderate stamp duty rates to make property transactions more affordable and reduce rates specifically for women homebuyers, promoting women's ownership of property.
Furthermore, the lower percentage of tax deducted at source (TDS) on house rent payments exceeding INR 50,000/- and the amended section 194-IB, reducing the rate of TDS to 2% from 5%, will benefit both tenants and landlords.
Industry experts, such as Mr. Prashant Sharma, President, NAREDCO Maharashtra, and Mr. Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Vice President, CREDAI-MCHI, have welcomed the Union Budget 2024-25 for its comprehensive approach towards job creation and boosting development, both of which they believe are positive developments for the real estate sector.
Frequently Asked Questions
What is the impact of the removal of indexation on capital gains tax?
The removal of indexation does not necessarily mean one may have to pay more tax when selling a property. In fact, the new regime offers a 7.5% reduction in tax applicable on profits.
What is the allocation for capital expenditure in the Union Budget 2024?
The Union Budget 2024 has allocated INR 11.1 trillion crore for capital expenditure, representing 3.4% of GDP.
What is the aim of the PM Awas Yojana-Urban 2.0?
The PM Awas Yojana-Urban 2.0 aims to deliver one crore houses for the urban poor, backed by an allocation of INR 10 trillion crore.
What is the suggestion for stamp duty rates in the Union Budget 2024?
The government suggests that states moderate stamp duty rates to make property transactions more affordable and reduce rates specifically for women homebuyers, promoting women's ownership of property.
What is the impact of the lower TDS rate on house rent payments?
The lower percentage of tax deducted at source (TDS) on house rent payments exceeding INR 50,000/- and the amended section 194-IB, reducing the rate of TDS to 2% from 5%, will benefit both tenants and landlords.
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