The Union Finance Minister announced Stimulus 3.0 on 12/11/2020 which includes relief for home buyers/sellers.
A house in any city costs a few Crore rupees.
LTCG(Long Term Capital Gains tax) on sale of residential house is very disappointing as it takes the entire life to build or buy a house.
Senior citizens feel bad when they have to pay LTCG.
What was thought to be a retirement investment and income planning is taken away by tax. Who keeps books for 20 or 40 or more years to get indexation benefit, which started only a few years back?
One pays income tax and property tax all the years and must be allowed the benefit of LTCG free sale of one residential house.
Tax should be no incentive for illegal transactions, which make both the buyer and seller feel “guilty” and the Tax bureaucracy corrupt.
Do we want India to remain “Poor” or become prosperous?
Do we want to serve 80% population free food even after becoming a 5 Tr economy?
When will we learn to appreciate lawful income generators and wealth creators?
Garibi par kashidakari karte huwe hamen 72 saal to ho chuke hai?
The so-called long-term gains are an illusion for many reasons.
To become a 5 Tr economy, we need to think big and not small, be innovative and bold. Every Indian citizen must be allowed to sell one residential house not exceeding an amount of Rs. 5 Crores in his/her lifetime free of LTCG.
Sale of a house is different from sale of shares or equities and must not be mixed up (share/equities are speculation and government servants are not allowed to deal frequently in it under conduct rules).
Here is an extract from the internet for guidance: “If the clients were a married couple who are U.S. citizens in Canada filing U.S. taxes jointly, they could potentially have a total exclusion of US$500,000 (US$250,000 each). To qualify, Mr. Ritchie says the sellers must have owned and occupied the home as their principal residence for at least two years before they sell it. THE GLOBE AND MAIL”.
A single tax reform as suggested can clean the tax regime of corruption and boost consumption, promote construction industry in a big way providing roti-kapada and makaan to millions, create huge employment, prepare society for the 5 trillion economy. There may not be any need for special packages by the government from time to time as the economy will become self-sustaining in no time.
It is doubtful if the government gets even a thousand crore by way of LTCG on sale of residential house property.
Added on 22/11/2020:
ET19/11/2020 reported that a study by the IIM, Bangalore for the National Housing Bank has suggested that the states drastically reduce stamp duty and registration charges so that more houses can be built under the scheme of HFA (Housing For All), which covers the poor and middle income people. States would not suffer any loss of revenue. Rather they would get more revenue as the number of houses will increase hugely yielding more revenue and boosting economic growth.
The IIM should have covered the LTCG and every other tax on housing industry and constraints by tax laws and corrupt practices. An honest study would show that the construction industry has the potential of making the economy 50 trillion economy if we go for development on the lines of countries like Singapore or European countries boosting city building successes.
HFA does not guarantee quality construction or aesthetics or hygienic surroundings but advertises only big number e.g. 100,000 houses or 1.2 million houses. They will look like ugly eyesore of concrete jhuggi/jhonpris (ghettoes) after less than 20 years. Cities are not built for decades but centuries. Besides, a city should attract visitors as a sign of development and not a shabby colony of the country’s poor people.