Background
In the Union Budget 2024, the Indian government suggested lowering the Long-Term Capital Gains (LTCG) tax rate from 20% to 12.5% for real estate. However, they also planned to remove indexation benefits, which help adjust the purchase price for inflation. This worried many taxpayers, as it could mean paying more in taxes.
New Amendments
In response to these concerns, the government has now changed the Finance Bill 2024. They introduced an option for those who bought properties before July 23, 2024. Now, taxpayers can choose between:
- A 12.5% LTCG tax without indexation benefits.
- A 20% LTCG tax with indexation benefits.
Impact of These Changes
Indexation benefits help lower the taxable gain by accounting for inflation. Removing these benefits could have increased taxes for many people, especially the middle class. By giving an option between the old and new tax rates, the government aims to ease the tax burden.
Experts’ Views
Tax experts support the amendment. Yogesh Kale from Nangia Andersen India said this move aims to calm taxpayer worries by offering a better tax option. Gouri Puri from Shardul Amarchand Mangaldas & Co. mentioned that this change helps address concerns about losing indexation benefits and ensures taxpayers are not worse off due to the new law
The government’s decision to revise the Finance Bill 2024 shows they are listening to public feedback. By allowing property owners to choose the best tax method for them, the government aims to balance its needs with taxpayer relief, making the tax system fairer.
