NEW DELHI: Union
finance minister Nirmala Sitharaman
on Wednesday announced amendments regarding the Long-Term Capital Gains (LTCG) tax proposal on
real estate
during a debate on the Finance Bill in Lok Sabha.
Taxpayers will now have the choice to calculate their tax liability using either the old system or the reduced rates without indexation, and pay the lower of the two amounts.
The rollover benefit will still be available for those who purchase new immovable property using the capital gains from the sale of old property.
The Union Budget 2024-25 presented on July 23, proposed a reduced LTCG tax rate of 12.5 percent, down from 20 percent, while eliminating the
indexation benefit
. This proposal faced significant criticism from various stakeholders, including opposition parties and tax professionals.
A key amendment in the Bill addresses the restoration of indexation benefit for properties purchased before July 23, 2024. Individuals or Hindu Undivided Families (HuFs) who acquired houses prior to this date can now choose between paying LTCG tax at the new rate of 12.5 percent without indexation or claiming the indexation benefit and paying a 20 percent tax.
The finance minister had said that the indexation benefit was proposed to be removed in the Budget to bring all asset classes under one rate and not to enhance revenue.
