Question: The Government recently proposed changes to the capital gains tax on real estate property. Kindly highlight the proposed changes.
Response given by CA (Dr.) Suresh Surana: The Finance Bill (No. 2), 2024, presented by Hon’ble Finance Minister Nirmala Sitharaman on July 23, 2024, underwent certain amendments when it was passed by the Lok Sabha on August 6, 2024. A significant change in the revised bill was regarding the indexation provision in relation to long term capital gains tax on real estate properties.
Initially, the Finance Bill proposed reducing the capital gains tax on land or buildings from 20% to 12.5%, while removing the indexation benefit. This change was set to take effect from July 23, 2024.
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However, the amended Finance Bill (No. 2), 2024, introduced a proviso allowing taxpayers transferring long-term capital assets such as land or buildings acquired before July 23, 2024, to choose between the following tax options:
a. 12.5% tax rate without indexation benefit, or
b. 20% tax rate with indexation benefit, whichever is more advantageous.
Key points to note are:
a. This benefit is available to resident individuals and Hindu Undivided Families (HUFs).
b. The relaxation applies specifically to real estate properties (land or buildings).
c. The property must have been held for at least 24 months to qualify as a long-term capital asset.
d. The property must have been acquired before July 23, 2024.
Disclaimer: The views and facts shared above are those of the expert. They do not reflect the views of financialexpress.com