Indexation removal from realty sales to have mixed impact

THE removal of indexation benefits from property sales is expected to have a mixed impact with investors likely to pay more in taxes if property prices are appraised at a tepid pace.

- ARSHAD KHAN

In scenarios where property prices have risen in the range of 1213% or more per year, investors stand to benefit handsomely from the new tax regime.

While the Income Tax Department claims a cut in longterm capital gains (LTCG) rate from 20% with indexation to 12.5% without indexation for real estate will benefit in almost all cases, Global brokerage firm CLSA said the impact of this new regime is likely to be negative for investors with a holding period of less than 5 years and where property price appreciation is moderate (less than 10% per annum).