indexation benefits on realty sales. However, Finance Minister Nirmala Sitharaman told ET in an interview that those who are criticising the move are missing the larger picture.
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Sitharaman announced the decision through Union Budget 2024.
While tax rates on capital gains earned from the sale of house properties held for the long term has been reduced, the benefit of indexation available to taxpayers has now been withdrawn.
«Yes, definitely (missing the larger picture). After my budget presentation, the Central Board of Direct Taxes has been putting out clarifications to explain that this decision hasn’t been taken just like that. An exhaustive exercise to analyse different cases was undertaken before the decision was arrived at,» Sitharaman told ET while explaining the rationale behind the move.
The LTCG (long-term capital gains) has been reduced from 20 per cent with indexation benefit to 12.5 per cent without indexation for the real estate sector. Indexation is a mechanism to adjust the purchase price of an investment like a house to reflect the effect of inflation on such assets.
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