DLF sees no major impact on sales due to indexation benefit removal

DLF sees no major impact on sales due to indexation benefit removal

Delhi NCR-based listed real estate developer DLF Limited said it does not see any major impact on sales due to removal of indexation benefit by the central government.

The central government has tweaked the capital gains tax regime for all asset classes, including real estate, in the Union Budget 2024. Two of the key changes that would impact lakhs of homeowners across the country are: the removal of indexation benefits for calculation of capital gains and reduction in the Long Term Capital Gains (LTCG) tax rate.

On one hand where many real estate experts have expressed concerns that these changes in the capital gain tax regime may take a toll on the sales in real estate sector, DLF said that it will not have major impact on sales.

“The budget was obviously a very interesting budget. There has been lot of noise around indexation (removal) but once the noise is filtered out I don’t think It has too much of a bearing on the way the sales behaviour will be,” Ashok Tyagi, MD and CEO, DLF Limited, said in an investors call on July 26.

Also Read: DLF Q1 results: Net profit up 23% to Rs 646 crore

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India's largest realty firm DLF Limited on July 25 reported a 23 percent YoY jump in its net profit at Rs 646 crore for the quarter ended June 30, 2024. The company had posted a net profit of Rs 526.11 crore in the year-ago period.

The company has given a sales guideline of Rs 17,000 crore for the financial year 2024-25. DLF's sales bookings have jumped over three-fold to Rs 6,404 crore during the first quarter of this fiscal as against Rs 2,040 crore in the year-ago period.

In Union Budget 2024, Finance Minister Nirmala Sitharaman had announced a reduction in the long term capital gains tax on real estate transactions from 20 percent earlier to 12.5 percent. However, until now taxpayers could avail of indexation benefits while calculating capital gains, which now has been withdrawn.

Also Read: New real estate tax rules: who gains and who loses?

This has created concerns among real estate developers and experts with many believing that the new norms may impact the sector adversely.

Experts have said that going forward, those who are investing currently in high-growth markets will have an edge over people who are buying properties for end-use or for moderate capital gains in the real estate sector.