Realty stocks in limelight; Godrej Properties surges over 4%

Realty stocks were in the limelight during trade on Wednesday, with Godrej Properties surging over 4%, a day after the government proposed significant relief for individuals who bought houses before July 23, 2024, by giving them the option to choose between two tax rates for long-term capital gains (LTCG) tax.

Shares of Godrej Properties surged 4.12 %, Macrotech Developers rallied 4 %, DLF climbed 3.88 %, Oberoi Realty jumped 3.79 % and Mahindra Lifespace Developers advanced 1.82 % on the BSE. The BSE realty index quoted 1.72 % higher at 7,953.46 during the morning trade.

The Budget 2024-25 had proposed to lower the LTCG from 20 % to 12.5 % but removed the indexation benefits. The new rates have come into effect from July 23, 2024. The indexation benefit allowed taxpayers to compute gains arising out of the sale of capital assets after adjusting for inflation.

Tax experts had said that the proposed changes in the Budget would raise the LTCG tax burden.

As per the amendments to Finance Bill, 2024, circulated to the Lok Sabha members on Tuesday, individuals or HuF (Hindu Undivided Family) who bought houses before July 23, 2024, can compute his/her taxes under the new scheme [@12.5 % without indexation] and old scheme [@20 % with indexation] and pay such tax which is lower of the two.

Gouri Puri, Partner, Shardul Amarchand Mangaldas & Co. said, this will quell taxpayer concerns around losing indexation benefits as a trade-off for a lower long-term capital gains tax rate.

"Taxpayers can choose the more beneficial regime, and should not be worse off because of change in law. Concerns around taxation of inflationary gains in respect of immovable property acquired prior to a change in the law have been addressed," Puri added.

In the equity market, the 30-share BSE Sensex jumped 1,046.13 points to 79,639.20 in early trade. The NSE Nifty surged 345.15 points to 24,337.70.