Govt rolls back LTCG taxes: Big relief for property owners
New Delhi: In a significant relief for property owners, the central government has proposed an amendment to the long-term capital gains (LTCG) taxes for properties purchased before July 23, 2024, media reports said.
Homeowners will have the option to either pay a 20 percent LTCG tax with an indexation benefit or a 12.5 percent rate without indexation.
This proposal comes after a substantial backlash from the real estate sector and middle-class homeowners over the higher tax liability without indexation benefits, which factor in market inflation.
The removal of indexation benefits also sparked concerns about an increase in cash transactions, potentially fuelling black money in the real estate market.
Under the new amendments, homeowners who bought properties before July 23, 2024, can choose between the new regime taxed at 12.5 percent without indexation benefits or the old regime taxed at 20 percent with indexation benefits.
However, those who purchase property on or after July 23 will have to adhere to the new tax regime by default.
This change was introduced in the Finance Bill presented in the Lok Sabha on August 6. Indexation adjusts the purchase price of an asset for inflation, thereby reducing the gains and, ultimately, the tax liability.
Real estate experts and homebuyers have welcomed the amendment, noting that the flexibility to choose between the old and new regime will allow sellers to select the most advantageous option, thereby minimizing their tax liability.
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