Government Amends LTCG Tax Proposal on Real Estate: A Boost to the Industry
Finance Minister Nirmala Sitharaman announces amendments to LTCG tax proposal on real estate, offering taxpayers a choice between reduced rates under the old system or without indexation.
Ltcg TaxReal EstateFinance BillNirmala SitharamanTax AmendmentsReal EstateAug 07, 2024
The rollback of the indexation benefit was a major bone of contention for the opposition and tax professionals, among others. The budget, tabled on July 23, had proposed to eliminate the indexation benefit and reduce the LTCG tax by 12.5 percent, from 20 percent.
However, the major amendment to the bill is that sales of properties purchased before July 23, 2024, should claim a rate of 12.5 percent without indexation or indexation benefits relating to the restoration of indexation benefits and pay a 20 percent tax.
Sitharaman stated that the Budget proposed to eliminate the indexation facility to bring all asset classes under one rate and not to increase revenue. However, the amendment is getting positive responses from real estate experts.
The amendment moved by the Finance Minister offers flexibility in computing long-term capital gains (LTCG) tax, allowing taxpayers to choose between a lower rate of 12.5% without indexation or a higher 20% rate with indexation for properties acquired before July 23, 2024. This enables property owners to strategically plan their sales, paying the lower of the two tax rates.
According to Mohit Jain, Managing Director of Krisumi Corporation,
Frequently Asked Questions
What is the amended LTCG tax rate on real estate?
Taxpayers can choose between a lower rate of 12.5% without indexation or a higher 20% rate with indexation for properties acquired before July 23, 2024.
What is the impact of the amendment on the real estate industry?
The amendment provides much-needed relief for property owners and the real estate industry, allowing for more stability in the real estate market.
Why was the indexation benefit eliminated in the budget?
The Budget proposed to eliminate the indexation facility to bring all asset classes under one rate and not to increase revenue.
How will the amendment affect property owners?
Property owners will experience less financial burden as a result of this shift, which also increases the appeal of real estate investments.
What is the effective date of the amendment?
The amendment is effective for sales of properties purchased before July 23, 2024.
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