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HomeNewsBusinessBudgetIndexation in real estate: Govt looking at options, may prefer exemption for transactions till July 2024

Indexation in real estate: Govt looking at options, may prefer exemption for transactions till July 2024

There is another option on the table to let people choose between old and new LTCG regimes, but no final decision has been made yet.

August 06, 2024 / 11:54 IST
This would give investors the flexibility to select the option that best suits their financial situation.

The government is looking at several options to address concerns from the real estate sector, as representations pour in at North Block regarding the recent Budget announcement on indexation removal.

In the Budget 2024, the FM announced the withdrawal of indexation benefits from real estate and lowered the long-term capital gains (LTCG) tax from 20% to 12.5%.

Indexation adjusts the purchase price of an asset for inflation, thereby reducing the gains and ultimately the tax liability.

Also Read | Homeowners may get a relief as Fin Min weighs tweaks in LTCG provisions: Report

Sources informed CNBC-TV18 that although the government is looking at options, no final decision has been made yet.

They said the government might prefer introducing a grandfathering clause, allowing transactions completed before July 2024 to continue benefiting from the previous indexation rules.

Also Read | MFs continue to remain positive on real estate stocks even as govt axes indexation benefit

Grandfathering refers to a provision that allows certain existing conditions or benefits to continue for transactions or investments that were made before a new rule or law is implemented.

The sources said the government is also looking at allowing taxpayers to choose between the old and new LTCG regimes for real estate transactions.

This would give investors the flexibility to select the option that best suits their financial situation.

The demand for amendments has been primarily driven by the real estate sector, and any relief measures are likely to be tailored specifically for this industry, the sources said.

Finance Minister Nirmala Sitharaman is expected to address the issue in her response to the Finance Bill, which is anticipated to happen tomorrow.

CNBC-TV18
first published: Aug 6, 2024 11:54 am

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