Budget 2024: Big relief, taxpayers! Centre may give option to calculate LTCG tax on property, pay lower tax under certain conditions

In a big relief to taxpayers, the government on Tuesday proposed amendments in the Finance Bill 2024 enabling assessees to choose to compute taxes at 12.5 per cent without indexation or at 20 per cent with indexation on real estate transactions under certain conditions. As per the amendments, handed out to members of the lower house of Parliament, individual taxpayers or Hindu Undivided Families (HUF) having purchased residential property before July 23 can compute their taxes under the two options and pay tax using either option. Finance Minister Nirmala Sitharaman may move the amended Bill in Parliament on Thursday, sources told Zee Business. 

Budget 2024: What do these amendments mean for taxpayers?

Simply put, the proposed amendments will lead to a significant relief to income tax assessees liable to pay long-term capital gains tax (LTCG). The changes will apply to land, buildings, or both. As per existing rules, the 12.5 per cent LTCG rate is applicable without indexation under the new tax regime and 20 per cent with indexation under the old regime. In case of transfer of a long-term capital asset acquired before July 23 by an individual or HUF, the taxpayer can compute their taxes under the new regime (at the rate of 12.5 per cent without indexation) or the old regime (at 20 per cent with indexation), and pay such tax at the more favourable rate of the two. 

ALSO READ: Why you may need to pay Rs 7.8 lakh extra in tax to sell the same property after indexation rule change

Tax experts welcome amendments

Most tax experts welcomed the proposed changes to the rules proposed in Budget 2024, presented in Parliament on July 23, saying that it will provide substantial tax relief for the real estate space. 

"The government’s initiative to allow taxpayers the option to compute taxes at either of the two rates is a significant step forward. This relief applies to the transfer of long-term capital assets, such as land or buildings, acquired before July 23, 2024," said Niranjan Hiranandani, Chairman of the Hiranandani Group and NAREDCO.

"By enabling taxpayers to choose the lower tax burden between the new and old schemes, the amendment is poised to drive investment and enhance sales across housing segments. We are grateful for the Finance Minister's forward-thinking approach in implementing these beneficial measures," said Hiranandani.