Realty players grapple with indexation move | Financial Express
A day after the Union Budget removed the indexation benefit for the sale of properties, the real estate sector is still coming to grips with the change. The income tax department tried to clear the air with a series of tweets on Wednesday and said that the move will benefit a large number of taxpayers looking to sell properties. The finance minister’s move to reduce long term capital gains (LTCG) tax rate from 20% with indexation to 12.5 % without indexation for real estate will benefit in almost all cases, the I-T department said. Indexation means adjusting the purchase price of a property for inflation, thereby reducing the gains and ultimately the tax liability. “Nominal real estate returns are generally in the region of 12-16% per annum, much higher than inflation. The indexation for inflation is in the region of 4-5% depending on the period of holding.
