Reintroduced indexation for property disallows loss offsets, excludes NRIs
Read this | A guide to capital gains tax on property sales: Navigating pre-, post-2001 rules Mayank Mohanka, founder of TaxAaram India and partner at S.M. Mohanka & Associates, agreed. "The Notice of Amendments specifically states that the revised provision is to be inserted after line 37 of page 39 in the Finance Bill, 2024, right after the clause for resident individuals and HUFs.
The clauses for companies and non-residents have been excluded from this amendment," he explained. Vaswani added that the final amendment should clarify this. “It is unlikely that the exclusion of these groups was a mistake.
The amendment would have simply said 'applicable to all assesses' if that was the case." Tax experts warn that these limitations could significantly impact taxpayers, particularly NRIs who often face challenges in selling properties in India. Many NRIs end up selling their properties at a lower price because it’s difficult to find buyers who can pay the full amount in cash, Vaswani noted. Additionally, NRIs face complexities in obtaining lower TDS certificates and 15CB certificates to remit sales proceeds abroad.
The Union Budget for 2024-25 had proposed to lower the LTCG from 20% to 12.5% but removed indexation benefits. The new rates came into effect 23 July 2024. The indexation benefit allowed taxpayers to compute gains arising out of the sale of capital assets after adjusting for inflation.
Indexation benefit was retained for properties bought or inherited before 2001. The option of indexation applies only to gains, not losses. If a property is sold at a loss, owners cannot offset or carry forward this loss.
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