Capital gains tax changes bring big relief for homeowners: 12.5% LTCG tax or 20% tax with indexation, which will reduce tax outgo?
New capital gains tax changes on the property: Amendments in Finance Bill you must know
After much debate on social media platforms and representations from the various stakeholders of the real estate industry, the Union government has come up with two options for homeowners. According to the Finance (No. 2) Bill, 2024 introduced in the Lok Sabha, «Provided further that in the case of transfer of a long-term capital asset, being land or building or both, which is acquired before 23rd day of July 2024, where the income tax computed under item (B) exceeds the income-tax computed in accordance with the provisions of this Act, as they stood immediately before their amendment by the Finance (No.2) Act. 2024, such excess shall be ignored.»
What are the changes in the proposed amendments? Shrinivas Rao, FRICS, CEO, Vestian explains, «Property buyers who have acquired property before July 23, 2024, will have the option to choose between the new rule (12.5% tax without indexation) and the old rule (20% tax with indexation) to ensure lower tax liability.»
To ease the impact of the newly introduced LTCG tax with indexation, the Union government introduced a grandfathering clause. This clause allows property owners to choose between the old scheme with indexation benefits and LTCG tax rate of 20% or the new scheme at 12.5% LTCG tax without indexation, says Piyush Bothra, Co-Founder and CFO, of Square Yards.
Simply put, there will be two options for property owners now while selling their properties and they can go for the
