The Finance Bill 2024 is expected to bring slight relief to property buyers, with the government implementing amendments to long-term capital gains (LTCG) on property.
What Happened: Taxpayers will now have the flexibility to select between two options for properties acquired before July 23, 2024. They can choose a lower tax rate of 12.5% without indexation or opt for a higher rate of 20% with indexation.
This new provision allows individuals and Hindu undivided families (HUFs) to compute their tax liability under both options and then pay the amount that results in a lower tax burden.
The LTCG relief will apply only to immovable assets such as houses, land and buildings, as well as unlisted securities. The choice aims to provide more flexibility and potentially reduce the tax liability for property owners.
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Kanthi Bathini from Wealthmills Securities said that the government is considering bringing back the benefit after it faced some resistance from the public with respect to indexation after the changes were made in the Union Budget 2024. But real estate stocks are not going to react much to the decision because the change will not impact fresh investments in the sector, he added.
On July 23, property stocks crashed after the Budget fine print showed the government had removed indexation benefits associated with the sale of a property.
Price Action: Property stocks showed mixed trading on Wednesday.
DLF shares were up 2.30% at ₹839.60, Shares of Sobha were down 0.59% at ₹1,739.40, Bridage Enterprises was trading 1.18% higher at ₹1,171.05 while Godrej Properties was up 1.71% at ₹2,976.70.
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