Government Announces LTCG Tax Relief for Real Estate Transactions
Finance Minister Nirmala Sitharaman introduces significant tax reforms in the Union Budget 2024, including a reduced LTCG tax rate for real estate transactions.
Ltcg TaxReal EstateUnion Budget 2024Nirmala SitharamanTax ReformsReal EstateAug 07, 2024
This change offers substantial relief on long-term capital gains for immovable property. The flexibility provided in the grandfathering provision applies to all property transactions finalized before the Budget’s presentation on July 23.
In the Union Budget 2024, Finance Minister Nirmala Sitharaman announced that for long-term capital assets like land or buildings acquired before July 23, 2024, taxpayers can choose to calculate their taxes under the new scheme (12.5% without indexation) or the old scheme (20% with indexation), paying whichever is lower. This change removes indexation benefits for real estate transactions and reduces the LTCG tax from 20% to 12.5%.
The updated regulations, effective July 23, 2024, maintain indexation benefits for properties acquired before 2001, while only recent acquisitions are subject to the new rules. Transactions completed before this date remain unaffected. Previously, indexation benefits helped homeowners reduce taxable profits by adjusting property costs for inflation.
In addition to the LTCG tax reform, the Union Budget 2024 introduced other key changes, including an increased Standard Deduction of Rs 75,000 and revised tax slabs. The securities transaction tax (STT) for futures and options was also raised, with the rate for the sale of options in securities increasing from 0.0625% to 0.1% of the option premium, and the rate for futures rising from 0.0125% to 0.02%.
One of the key changes was the adjustment in the capital gains tax for shares and stocks, which increased from 10% to 12.5%. This increase results in a 2.5% reduction in post-tax returns.
The Union Budget 2024 was presented by Finance Minister Nirmala Sitharaman on July 23, 2024. The budget introduced several significant tax reforms, including changes to the LTCG tax rate for real estate transactions.
The Indian government is responsible for introducing and implementing tax reforms in the country. The Union Budget 2024 is a key document that outlines the government's financial plans and policies for the upcoming fiscal year.
Frequently Asked Questions
What is the new LTCG tax rate for real estate transactions?
The new LTCG tax rate for real estate transactions is 12.5% without indexation benefits.
Can taxpayers choose between the old and new tax schemes?
Yes, taxpayers can choose to calculate their taxes under the new scheme (12.5% without indexation) or the old scheme (20% with indexation), paying whichever is lower.
Are transactions completed before July 23, 2024, affected by the new regulations?
No, transactions completed before July 23, 2024, remain unaffected by the new regulations.
What is the increased Standard Deduction introduced in the Union Budget 2024?
The increased Standard Deduction introduced in the Union Budget 2024 is Rs 75,000.
How will the adjustment in the capital gains tax for shares and stocks affect investors?
The increase in the capital gains tax for shares and stocks from 10% to 12.5% will result in a 2.5% reduction in post-tax returns for investors.
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