The government proposed relief for taxpayers on Tuesday concerning capital gains from real estate.
Property owners can now choose between a 20 percent or a 12.5 percent tax rate on these gains.
The details of this amendment in the Finance Bill 2024 have been shared with Lok Sabha members.
Under the revised proposal, individuals and Hindu Undivided Families (HUFs) buying a house before July 23, 2024, can choose to pay a 12.5% tax without indexation.
Additionally, individuals can choose to pay 20 percent tax with indexation under the old scheme.
They can select the option that results in a lower tax amount.
During the Budget 2024-25 presentation, Finance Minister Nirmala Sitharaman announced a reduction in the tax rate to 12.5 percent but with the removal of the indexation benefit on property sales.
This change was met with some dissatisfaction from various sectors.
After the Budget was presented,
the Income Tax Department indicated that most taxpayers would likely see “substantial tax savings” from the reduced long-term capital gains (LTCG) tax rates in the real estate sector.
Yogesh Kale, Executive Director at Nangia Andersen India, mentioned that the proposed amendments in the New Capital Gains Tax Regime from Budget 2024 aim to address taxpayer concerns and offer some relief.
Kale mentioned that although the indexation benefit is being gradually removed, assets bought before July 23, 2024, will be grandfathered.
Taxpayers will have the choice to pay capital gains tax at either 12.5% without indexation or 20% with indexation, depending on which option is more advantageous.
Gauri Puri, partner at Shardul Amarchand Mangaldas & Co, stated that this change will resolve concerns for taxpayers who might lose indexation benefits in favor of a lower long-term capital gains tax rate.
Puri explained that taxpayers will have the option to select the most advantageous tax regime, ensuring they are not worse off due to the law change.
This adjustment addresses worries about taxing inflation gains on property acquired before the law change.
