Starting April 1, 2023, long-term capital gains tax exemption towards buying residential units will be capped at Rs 10 crore, according to the amendments made to Section 54 and 54 F, as announced in Budget 2023. Finance minister Nirmala Sitharaman in her Budget Speech said, “For better targeting of tax concessions and exemptions, I propose to cap deduction from capital gains on investment in residential houses under sections 54 and 54F to Rs 10 crore.”
With the deadline fast approaching, realty experts anticipate HNIs invest in luxury real estate before April 1, 2023, to leverage long-term capital taxes with no exemption. However, from April 1, 2023, this change is also expected to make a positive impact in properties up to Rs 10 crore category, believes the realty segment.
According to Rohit Gera, managing director, Gera Developments, ” The minor negative impact at the highest end of the market will lead to a positive shift to homes priced in the Rs 10 crore segment as people will try and use the benefit of the 10 crore cap to their advantage. One of the benefits of 100% reinvestment was that since people were saving on payment of tax the transactions had less of a cash component. Whether people will resort to wanting to take cash for a part of the sale to avoid payment of tax remains to be seen.”
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