New Delhi, Aug 7 (FN Bureau) In a major relief for property owners, Union Finance Minister Nirmala Sitharaman is set to move an amendment to Finance Bill to allow taxpayers to calculate taxes on sale of properties by either choosing to pay 12.5% long-term capital gains tax (LTCG) without indexation or 20% with indexation. The provision will apply to properties purchased before July 23, 2024. “In the case of transfer of a long-term capital asset, being land or building or both, by an individual or HUF (Hindu Undivided Family), which is acquired before the 23rd day of July, 2024, the taxpayer can compute his taxes under the new scheme at the rate of 12.5% without indexation or under old scheme at the rate of 20% with indexation, ” explained an official quoting proposed amendment in Finance Bill. A copy containing amendments to the Finance Bill has been circulated among members of Parliament before being taken up by the Lok Sabha for consideration. Indexation benefits allow taxpayers to adjust the cost of asset factoring in inflation and as a result reduces tax burden. Union Budget 2024-25 presented in Parliament on July 23 proposed a lower 12.5% long-term capital gains tax on all assets but without indexation benefits.
This triggered protests from some quarters with many of them arguing that the move would increase their tax outgo on sale of properties. The government, however, defended the move saying it is aimed at simplifying the taxation of capital gains and facilitating their easy computation. “The reduction in the rate will benefit all categories of assets, substantially benefiting taxpayers in most cases. However, where the gain is limited relative to inflation, the benefit may be limited or absent in a few cases. Nonetheless, the new structure is expected to make the taxation process more straightforward and less burdensome for taxpayers, ” said Ministry of Finance in a release.