Sitharaman Offers Relief on LTCG Tax for Real Estate Investments
Finance Minister Nirmala Sitharaman has amended the LTCG tax proposal on real estate to provide taxpayers with more options.
Ltcg TaxReal EstateNirmala SitharamanBudget 2024 25Indexation BenefitReal Estate MaharashtraAug 07, 2024
The Finance Minister stated that the rollover benefit will be available to taxpayers who buy new immovable property utilizing the capital gains on the sale of old property. This move is expected to benefit individuals and Hindu Undivided Families (HUFs) who invest in real estate.
The Budget 2024-25 proposal to remove indexation benefit in the calculation of long-term capital gains on the sale of immovable properties had evoked sharp criticism from various corners, including opposition parties and tax professionals. The Budget, presented on July 23, had proposed a lower 12.5 percent rate of LTCG tax, down from 20 percent, while doing away with the indexation benefit.
However, the government has now decided to restore the indexation benefit on the sale of properties bought prior to July 23, 2024. Individuals or HUFs who bought houses before July 23, 2024, can opt to pay LTCG tax under the new scheme at the rate of 12.5 percent without indexation or claim the indexation benefit and pay 20 percent tax.
Sitharaman clarified 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. The government's decision to amend the LTCG tax proposal is seen as a relief to taxpayers who invest in real estate.
The Finance Minister's announcement is expected to benefit taxpayers who were affected by the Budget proposal. The amendment will provide them with more options to compute their tax liability, which will help reduce their tax burden.
Nirmala Sitharaman is the current Finance Minister of India, who presented the Budget 2024-25 on July 23. The Budget proposed several changes to the tax laws, including the LTCG tax proposal on real estate.
The LTCG tax is a tax on the profit made from the sale of assets held for more than two years. The tax is applicable on the sale of various assets, including real estate, stocks, and mutual funds. The government had proposed to remove the indexation benefit on the sale of immovable properties to bring all asset classes under one rate.
Nirmala Sitharaman is the Finance Minister of India, who has been instrumental in shaping the country's tax policies. She has presented several budgets since taking over as the Finance Minister.
Frequently Asked Questions
What is the LTCG tax proposal on real estate?
The LTCG tax proposal on real estate is a tax on the profit made from the sale of immovable properties held for more than two years.
What is the indexation benefit on LTCG tax?
The indexation benefit on LTCG tax allows taxpayers to adjust the cost of acquisition of the asset for inflation, which reduces their tax liability.
What is the new LTCG tax rate on real estate?
The new LTCG tax rate on real estate is 12.5 percent, down from 20 percent.
Who is eligible for the rollover benefit on LTCG tax?
Taxpayers who buy new immovable property utilizing the capital gains on the sale of old property are eligible for the rollover benefit on LTCG tax.
What is the deadline for claiming the indexation benefit on LTCG tax?
Taxpayers can claim the indexation benefit on LTCG tax on properties bought prior to July 23, 2024.
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