NEW DELHI: The government has changed the rules so that long-term capital gains taxes on property bought before July 23, 2024, can be calculated either at the new rate of 12.5 percent without adjusting for inflation or at the old rate of 20 percent with inflation adjustments.
According to a new amendment introduced by the government after the 2024 Budget announcement by Finance Minister Nirmala Sitharaman, taxpayers can choose the more favorable option between the two mentioned tax rates.
This change will be included in the Finance Bill, which was presented in the Lok Sabha on August 6.
In the 2024 Budget, Nirmala Sitharaman said that indexation benefits for real estate would be taken away and the long-term capital gains tax would be cut from 20% to 12.5%.
This change received a scathing criticism from experts who claimed it could dramatically increase taxes for lots of real estate owners, particularly those having residential properties.
However, Revenue Secretary Sanjay Malhotra defended the change to The Indian Express saying other assets such as tax exempt bonds or Public Provident Fund (PPF) also do not have indexation benefits. He argued that the change aims to streamline taxes.
The Finance Bill, 2024 then makes the following amendments:-
1. The new tax rate of 12.5% can be used without indexation by the assessee being an individuals or HUF, who purchased house property upto July 23,2044.
2. They can instead opt to pay 20% (the old tax rate) with indexation
3. When two the options are available, then people can choose that option which will make their tax lesser.
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