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The Nifty Realty Index was the top sectoral loser on Tuesday following Finance Minister Nirmala Sitharaman’s Budget speech. Eight out of the ten constituents, including DLF, Godrej Properties, and Prestige Estates, saw losses between 2% and 6%.
Mumbai-based Sunteck Realty and Macrotech Developers were the biggest losers on the index, each dropping nearly 4%. Other notable losers included Brigade, Godrej Properties, and Oberoi Realty, with losses ranging from 3% to 4%.
During her speech, Finance Minister Sitharaman announced a reduction in Long Term Capital Gains Tax (LTCG) on property sales from 20% to 12.5%. However, the fine print of the budget revealed the removal of indexation benefits associated with property sales.
The budget document stated, “With the rationalisation of rate to 12.5%, indexation available under the second proviso to Section 48 is proposed to be removed for calculating long-term capital gains. This change, affecting property, gold, and other unlisted assets, aims to simplify capital gains computation for taxpayers and tax administration.”
Indexation adjusts the purchase price of an investment to account for inflation. A higher purchase price translates to lower profits and, consequently, lower taxes. With indexation, individuals could reduce their long-term capital gains, thereby lowering their taxable income.
Real estate stocks are also experiencing profit booking after significant gains earlier in the year. The Nifty Realty Index has risen by 35% in 2024, with stocks like Sobha, Phoenix Mills, and Godrej Properties gaining between 55% and 85%.
On Tuesday, DLF shares ended 3% lower, while Sunteck Realty shares fell by 4.5%.
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By Proptechbuzz
By Ravi Kumar
