Big relief: Taxpayers will have two options on LTCG on properties

Finance Minister Nirmala Sitharaman has proposed an amendment in the Finance Bill to give big relief on capital gains tax in property transactions.

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The proposed amendment implies that taxpayers on property transactions can avail either a lower tax of 12.5 per cent without indexation or a higher rate of 20 per cent with indexation, if the property is acquired before July 23, 2024, the day the union budget was presented in the Lok Sabha.

The taxpayers can compute taxes under both schemes and will have a choice to pay tax under the scheme in which it is lower.

July 23, 2024, is now set as the cut-off date for the calculation of the capital gains versus the earlier cut-off of 2001 that had caused a lot of concern over its impact on long-time owners of property assets.

"Implications of this will be that long-term capital gain tax on the transfer of land and building acquired before 23rd July, 2024 will be lower of tax computed under new law i.e 12.5 per cent without indexation and the tax computed under old law I.e @20 per cent after indexation," tax expert and Charted Accountant Ved Jain said.