In a significant policy shift, Finance Minister Nirmala Sitharaman has proposed an amendment to the Finance Bill, 2024, that offers taxpayers a crucial choice regarding Long-Term Capital Gains (LTCG) tax rates. The amendment allows property owners and investors to select between a 12.5% LTCG tax rate without indexation or a 20% rate with indexation for properties acquired before July 23, 2024.

This move, which comes after earlier backlash over the proposed elimination of indexation benefits in Budget 2024, is seen as a vital relief for the real estate sector. Industry leaders have welcomed the amendment, highlighting its potential to mitigate concerns and support continued growth in the sector.

Industry Reactions:

Prashant Sharma, President of NAREDCO Maharashtra, expressed strong support for the amendment. “We welcome this crucial decision by Finance Minister Nirmala Sitharaman,” he said. “The flexibility to choose between a 12.5% LTCG rate without indexation and a 20% rate with indexation is a significant relief for the real estate sector. This amendment ensures that homeowners and investors are not unduly burdened by the tax changes and helps maintain investor confidence.”

Pritam Chivukula, Co-Founder and Director of Tridhaatu Realty and Vice President of CREDAI-MCHI, echoed similar sentiments. He praised the balanced approach of the amendment, noting that it addresses stakeholder concerns and provides much-needed flexibility in managing tax liabilities. “This decision will encourage continued investment in real estate and foster confidence among developers and homebuyers,” he added.

Rajeev Ranjan, Co-Founder and CEO of The Mentors Real Estate Advisory Pvt. Ltd, highlighted the benefits of the amendment for investors. “Allowing taxpayers to choose between the two tax rates is a significant relief and empowers them to align their tax strategies with their financial goals,” he said. “This flexibility is particularly valuable in a diverse real estate market.”

Vedanshu Kedia, Director of Prescon Group, commended the government’s responsiveness to public concerns. “The amendment reflects a deep understanding of the complexities involved in tax planning,” he remarked. “By providing an option for a more beneficial tax regime, the government is fostering a healthier and more resilient real estate market.”

Overall, the proposed amendment is seen as a positive development for the real estate sector, offering a balanced approach to tax calculations and supporting sustained growth and stability in the market.

Also Read: New LTCG Tax Options Boost Real Estate Market

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Anuj Puri, Chairman – ANAROCK Group

The government’s revised budget announcement allows taxpayers to pick between a 12.5% Long-Term Capital Gains (LTCG) tax rate without indexation and a 20% rate with indexation, for properties purchased before July 23, 2024. This will have a very profound impact on both homeowners and aspiring homebuyers.

Homeowners: This change gives homeowners flexibility in their tax liabilities when they sell their property. For properties held over a long period, where inflation has majorly raised the property’s value, opting for the 20% tax rate with indexation would be beneficial. Indexation adjusts the purchase price for inflation, potentially reducing the taxable gain and overall tax liability. For properties held for shorter periods or in low-inflation periods, the 12.5% rate sans indexation could be more beneficial and result in a lower tax burden.

Homebuyers: This revision can potentially stimulate the residential property market because it provides clarity and implies potential tax burden reduction. Homebuyers’ sentiment will improve as they have flexible options for addressing their future capital gains tax burden. This will result in higher demand, particularly in markets where property values have been seen to rise significantly.

Also, the anticipation of these changes can potentially cause some homeowners to sell properties sooner to benefit from the new tax regime. This will raise the overall supply of housing units available on the market, helping to keep prices in check.

As per ANAROCK Research, H1 2024 saw total sales of nearly 2.51 lakh units across the top 7 cities, 9% more than the same period last year (H1 2023). Given that Q2 2024 saw sales tapering due to the election heat and the increased prices across cities, the new tax imposed by the government in the budget was considered a dealbreaker for many. Now, with the government giving these options to the homebuyers, housing sales momentum will continue unimpeded.

Also Read: More than 50% of Developers Seek Tax Rationalization and Lower Interest Rates from New Government

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It is mandatory that every real estate agent has this registration number with them before they start the profession too.

Recently even MahaRERA Introduced an examination that checks how much a real estate agent is aware about the real estate industry
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Passing this exam is mandatory for a real estate agent to get registered with MahaRERA.

However, MahaRERA came out with a list of 13,785 real estate agents who have lost their validity.

The list can be accessed here. The list was issued on MahaRERA website under the tag Real Estate Agents whose Registration validity has lapsed.

There are many real estate agents in the list hailing from Mumbai Metropolitan Region.

Also Read: Project deadline is extended only after receiving Guarantee of completion: MahaRERA

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