Realty Stocks Surge Following New Tax Relief Announced by Government

Realty stocks soared on Wednesday after the government proposed a significant relief for homebuyers who purchased property before July 23, 2024. The new measure, part of the Budget 2024-25, allows taxpayers to choose a more favorable tax rate for long-term capital gains, boosting market sentiment.

Realty stocks were in the spotlight on Wednesday morning trade, with Godrej Properties seeing a significant surge of over 4% following a government proposal on tax relief for homebuyers. This comes as part of the Budget 2024-25 measures aimed at offering financial relief to individuals who purchased houses before July 23, 2024.

Several realty stocks performed well: 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 showed an upward movement, quoting 1.72% higher at 7,953.46 during the morning trade. The Budget 2024-25 proposed to lower the long-term capital gains (LTCG) from 20% to 12.5%, but removed the indexation benefits, which allowed the adjustment of gains for inflation.

Experts suggested that the proposed changes would increase the LTCG tax burden. However, amendments to the Finance Bill, 2024, circulated to Lok Sabha members, indicate that homebuyers who purchased property before the given date can choose the more favorable tax regime, either 12.5% without indexation or 20% with indexation, easing taxpayer concerns.

Gouri Puri, Partner at Shardul Amarchand Mangaldas & Co., commented that this new measure will alleviate concerns about losing indexation benefits and will allow taxpayers to benefit from the more favorable tax regime without being worse off due to changes in the law.

The equity market also reacted positively, with the 30-share BSE Sensex climbing 1,046.13 points to 79,639.20, and the NSE Nifty surging 345.15 points to 24,337.70 in early trade.

(With inputs from agencies.)