Relief For Property Owners: Centre Moves Amendment For Indexation Proposal On Real Estate
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The new rates have come into effect from July 23, 2024. (Representational image)
In addition to the real estate tax relief, the government has also proposed maintaining the long-term capital gains (LTCG) tax rate at 10 per cent for unlisted securities
The government on Tuesday proposed relief for individuals who purchase houses before July 23, 2024, by offering them the choice between two tax rates for long-term capital gains (LTCG) tax.
The Budget 2024-25 had suggested reducing the LTCG rate from 20% to 12.5% while eliminating indexation benefits. The new rates will apply from July 23, 2024. Indexation benefits previously allowed taxpayers to adjust gains from the sale of capital assets for inflation.
As per the amendments to Finance Bill, 2024, circulated to the Lok Sabha members on Tuesday, individuals or HuF who bought houses before July 23, 2024, can compute his/her taxes under the new scheme [@12.5 per cent without indexation] and old scheme [@20 per cent with indexation] and pay such tax which is lower of the two.
Tax experts had indicated that the proposed changes in the Budget would increase the LTCG tax burden.
LTCG relief applies only to immovable assets (houses, land, buildings) and unlisted securities. No relief is proposed for listed equity shares or equity-oriented mutual funds
Following the Union Budget presentation, the Income Tax (I-T) Department stated that ‘substantial tax savings’ are expected for most taxpayers due to the reduction in the long-term capital gains tax rate in the real estate sector.
Under the 2024-25 Budget changes, the government has retained the indexation benefit for properties bought or inherited before 2001.
Yogesh Kale, Executive Director at Nangia Andersen India, noted that the Finance Minister’s amendments to the new capital gains tax regime introduced in Budget 2024 have made efforts to address taxpayer concerns.
“While abolishment of indexation benefit continues, properties acquired prior to 23rd July 2024 are proposed to be grandfathered with the option to the taxpayers to offer the capital gain tax either at 12.5% without indexation or 20% with indexation, whichever is more beneficial,” Kale said.
(With inputs from PTI)
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