The government on Tuesday proposed relief for taxpayers by offering a choice to select either a 12.5 per cent long-term capital gains tax rate without indexation or a 20 per cent rate with indexation for property acquired before July 23.
News18 has learnt that an individual or Hindu Undivided Family (HUF) buying houses before July 23, 2024, can compute taxes under the new scheme of 12.5 per cent without indexation and the old scheme of 20 per cent with indexation and pay such tax which is lower of the two.
The union budget announced the withdrawal of indexation benefits from real estate and lowered the long-term capital gains from 20 per cent to 12.5 per cent. The government felt that this was a good move to adjust the purchase price of an asset for inflation, thereby reducing tax liability eventually.
A copy of the amendment to be moved by finance minister Nirmala Sitharaman is available with News18.
The minister will introduce the Finance Bill for fiscal 2024–25 in the Lok Sabha on Wednesday, seeking its consideration and passage. This bill is essential for implementing the budget proposals, which require approval from both houses of Parliament.
A few other amendments have been proposed too, pertaining to customs and excise duties: rate of duty, short-levy refunds, exemptions, and interest. Here too the options are of before July 23, 2024, which would be fixed at 10 per cent, and after or on July 23 at 12.5 per cent.
Many real estate groups and industry representatives had urged Nirmala Sitharaman to reconsider the LTCG move. Real estate stocks had declined on July 23 and were in the red. A worry was expressed that a large number of real estate owners, especially those with residential properties, would see a hike in their tax liability.
The government hopes that the changes would temper some of the anger without nullifying the purpose behind the removal of indexation, which it had envisaged.
