LTCG Tax Rollback:The shock given to home owners by Finance Minister Nirmala Sitharaman by eliminating the indexation benefit on property in the budget presented on 23 July 2024 has now been withdrawn to some extent. The government has amended its budget proposal and announced relief to those taxpayers who had bought their property before 23 July 2024. According to the latest decision of the government, now such home owners will also be provided the old option of paying 20 percent LTCG tax with indexation benefit while collecting long term capital gains (LTCG) tax on the property. Also, if they want, they will also be able to pay 12.5 percent LTCG tax as per the new rule without indexation benefit.
Benefits to those who buy a house before July 23
The benefit of the new amendment of the government will be available only to those who buy a house before 23 July 2024. Those who buy property on or after 23 July 2024 will not get this relief. According to the Amendment to Finance Bill, 2024 circulated among the Lok Sabha members, such individual taxpayers or Hindu Undivided Families (HUFs) who bought their houses before 23 July 2024 will be able to calculate their long term capital gains tax under the old tax scheme, in which they will have to pay 20 percent LTCG tax with indexation benefit. But if they want, they can also pay 12.5 percent LTCG tax without indexation benefit under the new scheme. The government had circulated this amendment on Tuesday itself, which was introduced in Parliament on Wednesday.
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Decision after reactions on budget proposal
It is believed that the government has taken this decision to amend its budget proposal keeping in mind the strong reactions from the real estate sector and middle class homeowners. However, after the budget, the Finance Ministry and CBDT had repeatedly argued that the decision to reduce tax rates by eliminating indexation benefit would prove beneficial for taxpayers. But despite this, many people were said to be angry with this proposal.
