Finance Minister Nirmala Sitharaman has said people who have bought house and sold houses made immense gains but still tried to get benefits from the government.
She was responding to a question from Network18 Group Editor Rahul Joshi on the Budget proposal to limit the deduction from capital gains on investment in residential property to Rs 10 crore.
“...beyond the Rs 10 crore house that you have, why do you also want to expect favours for the second, the third and the fourth house,” she said in the interview.
“...people who have bought house and sold house have made immense profits out of it but still enjoy benefits from the government…," she said.
Demand for super-luxury real estate is likely to be hit by the move to limit the deduction from capital gains on investment in residential property.
Presenting the Budget on Februrary 1, the finance minister said, “For better targeting of tax concessions and exemptions, I propose to cap deduction from capital gains on investment in residential houses under Sections 54 and 54F to Rs 10 crore.”
Any capital gains arising from the sale of long-term assets, including residential houses, are currently exempt from tax if the proceeds are invested in another residential property and there is no cap on the amount on which the deduction can be obtained.
Under the new provisions, a cap of Rs 10 crore has been put on capital gains on which deduction will be available.
The memorandum to the Budget 2023 provisions said the primary objectives of the section had been to mitigate the acute housing shortage and to give impetus to house-building activity.
“However, it has been observed that claims of huge deductions by high net-worth assesses are being made under these provisions, by purchasing very expensive residential houses. It is defeating the very purpose of these sections,” it said.