Nirmala Sitharaman Announces Relief for Real Estate Sector
The recent amendment to the long-term capital gains tax regime provides flexibility to property owners and ensures they are not adversely affected by the removal of the indexation benefit.
Real EstateLong Term Capital Gains TaxIndexation BenefitNirmala SitharamanFinance MinisterReal Estate NewsAug 07, 2024
The first option is a 12.5% LTCG rate without indexation, which allows taxpayers to pay a lower tax rate on the capital gains from the sale of property without adjusting the purchase price for inflation. The second option is a 20% LTCG rate with indexation, which allows taxpayers to pay a higher tax rate but adjust the property's purchase price for inflation using the Cost Inflation Index (CII) provided by the Central Board of Direct Taxes.
Frequently Asked Questions
What is the new amendment to the long-term capital gains tax regime for real estate?
The amendment offers two options for calculating long-term capital gains tax: 12.5% LTCG rate without indexation and 20% LTCG rate with indexation for properties acquired before July 23, 2024.
What is the benefit of the new amendment?
The amendment provides flexibility to property owners, allowing them to choose the option that works better for them, and ensures they are not adversely affected by the removal of the indexation benefit.
What is the Cost Inflation Index (CII)?
The Cost Inflation Index (CII) is provided by the Central Board of Direct Taxes (CBDT) and is used to calculate the indexed cost of acquisition for long-term capital gains tax.
Who is eligible for the new amendment?
The amendment is applicable to properties acquired before July 23, 2024.
How will the new amendment affect the real estate industry?
The amendment provides much-needed relief for property owners and, consequently, the real estate industry, a significant employment generator in the economy.
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