Anuj Puri, chairman of property consultant Anarock, says that the Union Budget 2020-21 has high expectations. Besides, the real estate sector of the country certainly has high expectations from the budget. The same thing is expected if the long-term capital gains tax (LTCG) can be abolished on the sale of the property. It is believed that this will greatly benefit the real estate sector. However, this is not entirely correct and may actually be an adverse and harmful decision.
Budget 2020: Government can cancel the tax in property and construction sector
Currently, if the property is not reinvested within 3 years, the owner of the property has to pay 30% capital gain tax. In order to save this tax, most people invest the amount received from selling property in the real estate market. However, the abolition of this tax will open the way for investors to invest in sectors other than real estate. Puri says that the economy will benefit from the abolition of LTGC Tax from the sale of properties as it will bring money in the hands of investors. Transactions will also increase in the stock market. However, it may have the opposite effect on the realty sector.
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In addition, the real estate sector is expecting a single-window clearance process. The sector hopes that work can be done with the availability of alternative investment funds to ensure liquidity to the housing projects and developers under pressure. Puri said the real estate sector contributes 8% to India's economy. He also advocated raising the interest rate tax exemption limit on housing loans from 2 lakh rupees. He said this could boost demand for the residential sector, especially on affordable and middle-class assets.