The government may change its decision on the most opposed budget

Relief for home buyers: Giving a big relief to home buyers, the Modi government at the Center on Tuesday decided to amend the recent system of long-term capital gains (LTCG). According to the information, after this change, taxpayers will be allowed to choose between a lower tax of 12.5 percent with listing (on non-listed properties) or a higher rate of 20 percent with listing on properties purchased before July 23, 2024. The government is considering this proposal which will be implemented soon.

Which decision taken in the budget is the government retreating from?

After this amendment, taxpayers will get tax relief on the economic benefits received on immovable properties. This change has been made through amendment in the Finance Bill 2024. Actually, this time in Budget 2024, Finance Minister Nirmala Sitharaman made many important announcements related to tax. In this, a big decision was taken to end the benefit of indexation in the real estate sector. Along with this, the long term capital gain tax was reduced from 20% to 12.5% ​​​​in the budget. But now there is a consideration to improve it.

A big announcement was made in the budget

In Budget 2024, the government announced major changes in the property sales tax rules. After this the controversy increased. The government has reduced the LTCG tax on long-term property sales to 12.5 per cent. But the indexation benefit on this was removed. Later the government clarified which properties would be subject to indexation and which would not?

How was the situation earlier?

Finance Minister Nirmala Sitharaman announced the standard long-term capital gains (LTCG) tax in her budget speech. Earlier, different LTCG rates were applicable on different financial and non-financial assets. For example, the sale of shares held for more than a year was taxed at 10 per cent, while the sale of non-financial assets such as real estate and gold was taxed at 20 per cent.

What was the new rule regarding property tax?

In the budget, the government has reduced the long term capital gain (LTCG) tax on the sale of any kind of property. This means that whether you sell shares or property, you will have to pay a long term capital gain tax of 12.5 percent. However, the government removed the indexation available on property sales. The government had then said that this change has been made to simplify the tax system.

What is indexation?

Indexation periodically adjusts the purchase price of a property in line with inflation over time. Which is used to calculate capital gains. The government releases the Cost Inflation Index (CII) every year to measure the change in prices compared to the base year (2001-2002). Indexation is determined by calculating on that basis.