Aam Aadmi Party (AAP) Rajya Sabha MP Raghav Chadha on Thursday hit out at the central government for its move to remove indexation benefit on sale of old property, as mentioned in the Union Budget 2024. Raghav Chadha said the removal of this benifit will lead to the inflow of black money in the country.
Raghav Chadha, during the discussion on the Union Budget 2024-25 in Rajya Sabha, urged the central government to roll back their decision, saying that people will never be able to buy their “dream homes”. He argued that the proposal will lead to excessive corruption in real estate, and the investments in the sector will go down.
"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, adding that removing indexation is not imposing tax but it is equivalent to "penalising investors".
In the proposal put forward by Union finance minister Nirmala Sitharaman as part of Budget 2024, individuals who are selling old properties will incur high tax, said Raghav Chadha.
"If you do not bring back indexation three things will happen in this country. First, investment in real estate will go down and people will never be able to buy their 'dream homes'," Chadha asserted.
The AAP MP further said that there will be an undervaluation of property deals, where people will by real estate at ‘circle rates’ and will never disclose the real value of the property.
"Third, there will be a huge inflow of black money if you don't roll back this decision to withdraw indexation," he said.
Chadha 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.
In the Union Budget 2024-25, 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.
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.
