 "Real estate stocks gain as govt proposes to amend indexation, LTCG tax rule")
Real estate stocks, LTCG tax relaxation amendment: Real estate shares were trading mostly higher on Wednesday, August 7, 2024. The rally in shares of real estate companies came today after the Central government, last evening, proposed an amendment in the Finance Bill pertaining to the indexation benefit rule for home/property owners.
Under the proposed amendment, home owners, planning to sell their property bought before July 23, 2024 (Union Budget 2024-25 announcement day), can choose between the new and old tax regimes, whichever results in a lower tax liability.
Under the new long-term capital gains (LTCG) tax regime, the tax rate is set at 12.5 per cent without the benefit of indexation. Conversely, the old regime imposes a 20 per cent tax but allows for indexation benefits.
Meanwhile, on the bourses, the Nifty Realty index surged 3.3 per cent to 1,034.2 levels in intraday trade.
Among individual stocks, Lodha (Macrotech Developers) rallied 4.3 per cent, Sunteck Realty 4.1 per cent, DLF 3.9 per cent, and Oberoi Realty 3.6 per cent in intraday trade.
Godrej Properties, Brigade Enterprises, Mahindra Lifespace, Prestige Estates, and The Phoenix Mills, on the other hand, were up in the range of 0.04 per cent to 2 per cent. By comparison, the Nifty 50 index was up 309 points, or 1.3 per cent, at 24,301 level at 10:45 AM.
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According to analysts, the earlier proposed LTCG tax rule for the real estate sector, removing indexation, favored investors who have generated high internal rate of return (IRRs), while investors with poor IRRs would have been worse off in the new regime.
That said, with the proposed amendment, the government has respected the legitimate concerns of many taxpayers. The proposal, now, gives 'the best of both worlds', they said.
Thus far in calendar year, the Nifty Realty index has zoomed 30 per cent as against around 12 per cent gain in the benchmark index.