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AAP MP Raghav Chadha on Thursday urged the government to restore indexation on long-term capital gain on sale of old property saying that the government’s decision to remove indexation benefit will result in huge inflow of black money in real estate and investments in the sector will go down.
The AAP Rajya Sabha MP, while taking part in the discussion on the Union Budget 2024, said people will never be able to buy their dream homes.
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“Restore indexation on long-term capital gains. Throughout the world, to woo investors to invest they are incentivised. In this country, by removing indexation we are disincentivising the investor class,” he said.
Removal of ‘Indexation’ benefit from the Investor is a grave mistake by the Government.
I explain in detail. Please watch. pic.twitter.com/AhB7vViy0n
— Raghav Chadha (@raghav_chadha) July 25, 2024
“Removing indexation is not imposing tax but it is equivalent to penalising investors,” he added.
In the budget, the government proposed reducing the long-term capital gains tax on immovable properties to 12.5 per cent from 20 per cent, but removed the indexation benefits to adjust for inflation.
Indexation is very important for long-term capital gain and therefore, I would urge the government to not remove it, Chadha said.
He also warned that if the indexation is not removed, then there will be three changes.
“First, the investment will dip in real estate and people will never be able to buy their ‘dream homes’. There will be an undervaluation of property deals and people will start buying and selling properties on circle rates and will never disclose the real value of property,” the AAP MP said.
“The real estate sector will see an inflow of black money on a large scale if you don’t roll back this decision to withdraw indexation,” he added.
As per the Memorandum to the Union Budget, with rationalisation of rate to 12.5 per cent, indexation available under Section 48 of the Income Tax Act has been proposed to be removed for calculation of any long-term capital gains, which is presently available for property, gold and other unlisted assets.
He also highlighted the high tax burden faced by common people and asked for a comprehensive review of both direct and indirect taxes.
“We impose taxes like the Europeans do, to get services like sub-Saharan countries,” he added.
