In the Indian Budget 2024, significant changes were made to the taxation of real estate, particularly concerning long-term capital gains (LTCG) tax. Initially, the budget proposed removing the indexation benefit for calculating LTCG on the sale of immovable properties, which led to criticism from various stakeholders. The removal of indexation would have increased taxable gains, thereby raising tax liabilities for property sellers.
However, an amendment was introduced to address these concerns. The Finance Bill 2024, passed in the Lok Sabha, allows taxpayers to choose between two options for calculating LTCG tax on properties acquired before July 23, 2024: a 12.5% tax rate without indexation or a 20% tax rate with indexation. This amendment provides flexibility and aims to mitigate the potential negative impact on the real estate market by allowing taxpayers to select the option that minimizes their tax burden.
The amendment is seen as a positive step by real estate and tax experts, as it offers relief to taxpayers and is expected to stimulate investment and sales in the housing market. The option to choose between the two tax regimes is intended to balance the need for tax revenue with the promotion of investment and growth in the real estate sector
