Budget 2020: Will LTCG tax removal benefit the real estate sector?

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January 31, 2020 5:15 PM

Budget 2020-21: The real estate sector has a long wishlist from Finance Minister Nirmala Sitharaman who is slated to present the budget on February 1, 2020.

union budget 2020, budget india 2020, india budget 2020, budget 2020 expectations,Union Budget 2020 India: In case, the government scraps the tax, the real estate sector may come under further stress, Anarock Chairman Anuj Puri said.

Budget 2020 India: The real estate sector has a long wishlist from Finance Minister Nirmala Sitharaman who is slated to present the budget on February 1, 2020. The budget is expected to be watched keenly by various sectors of the economy at a time when the economy is seeing a slowdown in growth. The experts are of the view that the government may announce a slew of measures to boost growth. For the realty sector, one expectation making the rounds is the possible scrapping of long-term capital gains tax (LTCG) on sale of the property. “The probable scrapping in the upcoming budget of LTCG tax on the sale of properties will result in a higher amount of returns in the hands of investors. More money in the hands of the investor brings in thoughts that are positive when it comes to the probable impact on the economy. Having said this, the Indian investor is all too unique, one needs to wait for the effect on investor sentiment – and even if the effect is positive, the percentage that will opt for real estate as an asset class in such a scenario is something that we need to wait and watch”, Niranjan Hiranandani – President – NAREDCO & ASSOCHAM, told Financial Express Online.

In case, the government scraps the tax, the real estate sector may come under further stress, Anarock Chairman Anuj Puri said. “While scrapping LTCG tax on the sale of properties may benefit the economy by increasing cash in the hands of investors and frequency of transactions in the stock markets, it could be detrimental to the realty industry”, Anuj Puri also said. New avenues may be opened for investors to get into other asset classes other than real estate, he added.

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The owner of property currently pays 30 per cent capital gains tax on the sale of the property if the gains are not reinvested in the realty sector within three years. The property sellers usually invest their gains below Rs 2 crore into either one or two properties to save on the tax. Meanwhile, the realty sector expects the government to announce measures to increase liquidity in the sector and issue funds to rescue stressed residential projects.

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