Aug 07, 2024 08:17 AM IST
In Budget, Nirmala Sitharaman announced withdrawal of indexation benefits from real estate and lowered the long-term capital gains (LTCG) tax from 20% to 12.5%.
The Centre has moved an amendment allowing long-term capital gains taxes on property purchases made before July 23, 2024, to be calculated under the new 12.5 per cent rate without indexation and the old 20 per cent rate with indexation. As per the amendment introduced by the government following Budget 2024 announcement by Finance minister Nirmala Sitharaman taxpayers can choose the more favourable option of the two mentioned above. This change will be introduced in the Finance Bill which was tabled in the Lok Sabha on August 6.
Read more: Real estate and tax experts welcome the Centre’s decision to ease long term capital gains tax for sale of property
What Nirmala Sitharaman announced in Budget 2024?
In Budget 2024, Nirmala Sitharaman announced withdrawal of indexation benefits from real estate and lowered the long-term capital gains (LTCG) tax from 20% to 12.5%. This was criticized by industry experts who pointed out that a large number of real estate owners- especially those owning residential property- may see a significant increase in their tax burden once new regime kicks in.
Read more: Centre to ease long term capital gains tax for sale of properties
Revenue secretary Sanjay Malhotra had defended the proposal to remove indexation benefits from LTCG on real estate at the time and said that other asset classes, including incomes from shares, interest and fixed deposits do not enjoy the same benefit. The move should be seen as a simplification measure, he had then said.
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Here are the changes the government has proposed for real estate sector?
As per the amendments to Finance Bill, 2024, here are the changes:
1. Individuals or HuF who bought houses before July 23, 2024 can compute his/her taxes under the new scheme at 12.5 per cent without indexation.
2. Individuals or HuF who bought houses before July 23, 2024 can compute his/her taxes under the old scheme at 20 per cent with indexation.
3. Individuals can choose to pay the tax which is lower of the two.