NEW DELHI: After uproar over removal of indexation benefits on sale of properties, the government on Tuesday proposed amendments to the Finance Bill-2024 with an aim to provide relief to taxpayers who bought houses before July 23, 2024 by giving them an option to choose between two rates for long-term capital gains (LTCG) tax.
As per the amendments circulated among MPs tonight, individuals will have the option to either pay 12.5 per cent LTCG tax on sale of property without indexation benefit or pay 20 per cent tax with indexation benefit as per the old system whichever is lower. “In the case of transfer of a long-term capital asset, being land or building or both, by an individual or HUF (Hindu undivided families) which is acquired before July 23, 2024, the taxpayer can compute his taxes under the new scheme (at the rate of 12.5 per cent without indexation) and old scheme (at the rate of 20 per cent with indexation) and pay such tax which is lower of the two,” the amendment moved by Finance Minister Nirmala Sitharaman says.
The Union Budget had proposed lowering the LTCG from 20 per cent to 12.5 per cent, but removed the indexation benefits. The new rates came into effect from July 23.
The indexation benefit allowed taxpayers to compute gains arising out of the sale of capital assets after adjusting for inflation. The budget proposal was criticised for potential to raise tax burden on the middle class.