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In a major relief to home buyers, the government on Tuesday proposed an amendment to the long-term capital gains (LTCG) regime, which will allow taxpayers to choose between a lower tax rate of 12.5 per cent without indexation or a higher rate of 20 per cent with indexation for properties acquired before July 23, 2024.
As per the proposed amendment, taxpayers who sold assets such as land or buildings before July 23 have the option to choose between the new and old tax regimes, allowing them to select the one that offers a lower tax liability.
Finance Minister Nirmala Sitharaman is likely to move the amendment in Lok Sabha on Wednesday after her reply to the debate on Finance Bill 2024-25.
The new LTCG regime offers a 12.5 percent tax rate without indexation benefits, while the old slab imposes a 20 per cent tax rate but allows for indexation benefits.
While tabling her seventh Budget on July 23, Sitharaman announced changes to long-term capital gains taxation, including the removal of the indexation benefit for capital gains tax on real estate sales. However, she reduced the long-term capital gains tax (LTCG) rate from 20 per cent to 12.5 per cent.
Though the Finance Minister said the this will lead to an overall reduction in average taxation, experts warned that the change would result in a higher effective tax burden on LTCG for property owners, especially those who have held their properties for more than five years.
