Proposed Changes to Capital Gains Tax on Real Estate: What You Need to Know
The government has proposed amendments to the capital gains tax on real estate properties, offering taxpayers a choice between two tax options.
Capital Gains TaxReal EstateTax ReformFinance BillLongterm Capital GainsReal Estate MumbaiAug 09, 2024
Initially, the Finance Bill proposed reducing the capital gains tax on land or buildings from 20% to 12.5%, while removing the indexation benefit. This change was set to take effect from July 23, 2024.
However, the amended Finance Bill (No. 2), 2024, introduced a proviso allowing taxpayers transferring long-term capital assets such as land or buildings acquired before July 23, 2024, to choose between two tax options
a. 12.5% tax rate without indexation benefit, or
b. 20% tax rate with indexation benefit, whichever is more advantageous.
Key points to note are
a. This benefit is available to resident individuals and Hindu Undivided Families (HUFs).
b. The relaxation applies specifically to real estate properties (land or buildings).
c. The property must have been held for at least 24 months to qualify as a long-term capital asset.
d. The property must have been acquired before July 23, 2024.
The proposed changes aim to provide relief to taxpayers who have invested in real estate properties. It is essential to note that the new provisions will have a significant impact on the tax liability of individuals and HUFs who have invested in real estate.
Information
The Finance Bill (No. 2), 2024, was presented by the Hon'ble Finance Minister Nirmala Sitharaman on July 23, 2024. The bill aimed to make significant changes to the tax laws in India.
The Finance Minister, Nirmala Sitharaman, has been instrumental in introducing several tax reforms in India. The Finance Bill (No. 2), 2024, is another step towards simplifying the tax laws and providing relief to taxpayers.
Frequently Asked Questions
What are the proposed changes to the capital gains tax on real estate?
The proposed changes include reducing the capital gains tax on land or buildings from 20% to 12.5% and allowing taxpayers to choose between two tax options: 12.5% tax rate without indexation benefit or 20% tax rate with indexation benefit.
Who is eligible for the proposed changes?
The proposed changes are available to resident individuals and Hindu Undivided Families (HUFs) who have invested in real estate properties.
What is the condition for a property to qualify as a long-term capital asset?
The property must have been held for at least 24 months to qualify as a long-term capital asset.
When will the proposed changes take effect?
The proposed changes will take effect from July 23, 2024.
How will the proposed changes impact taxpayers?
The proposed changes will provide relief to taxpayers who have invested in real estate properties and will have a significant impact on their tax liability.
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