NEW DELHI, Aug 7: Finance minister Nirmala Sitharaman on Wednesday said the contentious LTCG tax proposal on real estate is being amended to give option to taxpayers to compute tax liability under the old system or at reduced rates without indexation, and pay the lower of the two.
Replying to a debate on the Finance Bill, Finance Minister Nirmala Sitharaman said the rollover benefit will be available to taxpayers who buy new immovable property utilising the capital gains on the sale of old property.
The Budget 2024-25 proposal to remove indexation benefit in calculation of long term capital gains on sale of immovable properties evoked sharp criticism from various corners, including opposition parties and tax professionals.
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The Budget, presented on July 23, had proposed a lower 12.5 per cent rate of LTCG tax, down from 20 per cent, while doing away with the indexation benefit.
The major amendment in the Bill relates to restoration of indexation benefit on sale of properties bought prior to July 23, 2024. Now, individuals or HuFs who bought houses before July 23, 2024, can opt to pay LTCG tax under the new scheme at the rate of 12.5 per cent without indexation or claim the indexation benefit and pay 20 per cent tax.
Sitharaman said that the indexation benefit was proposed to be removed in the Budget to bring all asset classes under one rate and not to enhance revenue. (PTI)
