Union Budget 2024: Real Estate Investors Face Tax Hike with Removal of Indexation Benefit
The Union budget 2024-25 has proposed a tax hike for real estate investors, removing the indexation benefit on long-term capital gains, which could negatively impact the booming real estate market in India.
Union Budget 2024Real EstateLong Term Capital GainsIndexation BenefitProperty TaxReal EstateJul 23, 2024
Earlier, real estate investors enjoyed indexation benefits while calculating capital gains. This meant that if you bought a house for Rs 50 lakh and sold it for Rs 1 crore, you could adjust the purchase price to the cost inflation index of the income tax department. However, with the removal of indexation benefits, the gains will now be directly calculated by calculating the difference between the purchase and sale price. If your property is really old, this could result in a significant tax hike.
Several experts have expressed concerns over the removal of indexation benefits, including Diana Mathias, partner at Cignas, who noted that tax costs will substantially rise as this benefit is now denied. Dhruv Chopra, managing partner at Dewan PN Chopra & Co, also felt that the potential tax outflows may be higher under the new tax provisions, subject to facts.
On the other hand, the reduction of the holding period to two years for LTCG has been welcomed as a positive move. Niranjan Hiranandani, chairman of Hiranandani Group and NAREDCO, noted that aligning the holding period for long-term capital gains with that of equity shares will significantly boost investment and enhance competitiveness within the sector.
However, the overall impact of the budget on real estate investors remains to be seen. Real estate stocks saw a huge selling pressure on Tuesday, with the BSE Realty index tumbling 2.15 per cent. Experts believe that the removal of indexation benefits could negatively impact the real estate market, especially for long-term investors.
Cignas is a leading financial services company that provides investment and tax planning solutions.
Dewan PN Chopra & Co is a well-known chartered accountancy firm that provides tax and financial advisory services.
Dhruva Advisors is a leading financial services company that provides investment and tax planning solutions.
Hiranandani Group is a leading real estate developer in India.
NAREDCO (National Real Estate Development Council) is a leading real estate industry body in India.
Anarock Group is a leading real estate consultancy firm in India.
Cignas is a leading financial services company that provides investment and tax planning solutions.
Dewan PN Chopra & Co is a well-known chartered accountancy firm that provides tax and financial advisory services.
Dhruva Advisors is a leading financial services company that provides investment and tax planning solutions.
Hiranandani Group is a leading real estate developer in India.
NAREDCO (National Real Estate Development Council) is a leading real estate industry body in India.
Anarock Group is a leading real estate consultancy firm in India.
Frequently Asked Questions
What is the new tax rate for long-term capital gains on real estate?
The new tax rate for long-term capital gains on real estate is 12.5 per cent.
What is the impact of removing indexation benefits on real estate investors?
The removal of indexation benefits will result in a tax hike for real estate investors, especially those with older properties.
What is the new holding period for long-term capital gains on real estate?
The new holding period for long-term capital gains on real estate is 2 years.
How will the removal of indexation benefits affect the real estate market?
The removal of indexation benefits could negatively impact the real estate market, especially for long-term investors.
What is the reaction of real estate experts to the Union budget 2024-25?
Real estate experts have expressed concerns over the removal of indexation benefits, while welcoming the reduction of the holding period to 2 years for LTCG.
Related News Articles
Rohan Builders Achieves Unparalleled Excellence with 14 Consecutive Years of CRISIL DA2+ Grading
Rohan Builders continues to maintain its prestigious DA2+ Developer Grading from CRISIL, demonstrating its commitment to excellence in financial and operational parameters.
Sebi Chief Remains Tight-Lipped on Real Estate Investment Trusts
REITs comprise a portfolio of commercial real estate assets, most of which are already leased out.
PGA of America Launches State-of-the-Art Golf Courses in Mumbai, Navi Mumbai, and Hyderabad
AIVOT Golf & Sports Management collaborates with Shapoorji Pallonji Real Estate, Stonecraft Group, and Tvastar Golf to introduce PGA of America-branded golf courses in Mumbai, Navi Mumbai, and Hyderabad, setting a new standard for golf excellence in India
Raymond Expands Real Estate Footprint with Mahim Project Deal
Raymond, in a strategic move, has signed a Joint Development Agreement for a prestigious residential project in the prime location of Mahim West, Mumbai.
Amrita Singh, Zaheer Khan Among Celebrities Investing in Mumbai's Luxury Real Estate
Amrita Singh and Zaheer Khan are among the latest celebrities making significant investments in Mumbai's luxury real estate market. Discover the trends and insights of these high-profile investments.
SP Group Raises $3.3 Billion from Five Funds to Boost Real Estate and Construction Projects
SP Group secures a significant $3.3 billion investment from five prominent funds, aimed at refinancing and expanding its real estate and construction projects. This strategic move will help the company solidify its position in the market and drive sustain