Finance Minister Nirmala Sitharaman has introduced an amendment to the Finance Bill, 2024. The amendment offers taxpayers the choice between a 12.5% Long-Term Capital Gains (LTCG) tax rate without indexation or a 20% rate with indexation for properties acquired before July 23, 2024. Initially, the sector had voiced concerns that the original proposal in Budget 2024, which sought to remove indexation benefits, could stifle the growth of real estate. However, the newly proposed amendment has been widely welcomed for providing the necessary flexibility, allowing taxpayers to choose the most advantageous tax calculation method. Below are insights from industry leaders on this development.

Here's what leading real estate experts have to say about the recent announcement. Their insights reflect the widespread industry relief and optimism following the Finance Bill amendment, which offers greater flexibility for taxpayers in managing Long-Term Capital Gains (LTCG). The responses highlight the potential positive impact on the real estate sector, encouraging continued growth and investment.

Mr. Prashant Sharma, President, NAREDCO Maharashtra, expressed that "We are pleased with the amendment to the Finance Bill by Finance Minister Nirmala Sitharaman, which allows taxpayers to select between a 12.5% LTCG rate without indexation or a 20% rate with indexation for properties acquired before July 23, 2024. This decision is a significant relief for the real estate sector, which had concerns about the potential impact of the indexation proposal in Budget 2024. The flexibility to choose the more favourable tax computation method ensures that homeowners and real estate investors are not unduly burdened by changes in tax regulations. This move by the government reflects an understanding of the complexities within the real estate market and its importance to the overall economy. We believe this amendment will help maintain investor confidence and support sustained growth in the real estate sector, benefiting developers, homebuyers, and the broader economy."

Mr. Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Vice President, CREDAI-MCHI, stated that "The recent amendment proposed by Finance Minister Nirmala Sitharaman, allowing taxpayers the option to choose between a 12.5% LTCG rate without indexation or a 20% rate with indexation for properties acquired before July 23, 2024, is a welcome relief for the real estate industry. This balanced approach not only addresses concerns raised by stakeholders but also gives homeowners flexibility in managing their tax liabilities. The initial proposal to eliminate indexation benefits had sparked significant apprehension within the sector, as it threatened to impact the growth momentum we've been striving to maintain. By reintroducing these options, the government has demonstrated responsiveness to the industry's needs and the broader economy. This move will encourage continued investment in real estate, providing stability and fostering confidence among developers and homebuyers. We commend the government's decision and look forward to continued collaboration to support sustainable growth in the sector."

Mr. Rajeev Ranjan, Co-Founder & CEO, The Mentors Real Estate Advisory Pvt. Ltd, pointed out that "The proposed amendment by the Finance Minister, allowing taxpayers to choose between a 12.5% LTCG rate without indexation or a 20% rate with indexation for properties acquired before July 23, 2024, is a significant relief for property owners and investors. This flexibility empowers taxpayers to make decisions that align with their financial strategies, particularly in a real estate market that has experienced varied growth patterns. By offering this choice, the government acknowledges the diverse nature of property investments and provides a much-needed breather for those looking to optimise their tax liabilities in a challenging economic environment."

Mr. Vedanshu Kedia, Director, Prescon Group, said that "The recent amendment to the Finance Bill, which allows taxpayers to choose between a 12.5% Long-Term Capital Gains (LTCG) rate without indexation and a 20% rate with indexation for properties acquired before July 23, 2024, is a much-needed relief for property investors and homebuyers. This move reflects the government's responsiveness to the concerns raised by the public and shows empathy towards citizens who plan their taxes in advance. By providing homeowners with the flexibility to opt for the more beneficial tax regime based on individual circumstances, this amendment will help sustain investor confidence and encourage continued investment in the sector, as the government acknowledges the vital role that real estate plays in our economy. We believe this decision will positively impact both developers and homebuyers, fostering a healthier, more stable, and resilient real estate market."

In summary, the real estate sector has welcomed the amendment introduced by Finance Minister Nirmala Sitharaman in the Finance Bill, 2024. The amendment provides taxpayers the flexibility to choose between a 12.5% Long-Term Capital Gains (LTCG) tax rate without indexation or a 20% rate with indexation for properties acquired before July 23, 2024. This move addresses the sector's concerns regarding the initial proposal to remove indexation benefits, which was seen as a potential threat to the industry's growth momentum. The industry leaders have expressed their appreciation for the government's responsiveness and understanding of the real estate market's complexities. They believe this amendment will help maintain investor confidence, encourage continued investment, and support the overall growth and stability of the real estate sector, benefiting both developers and homebuyers.