Lok Sabha passes Finance Bill, amends LTCG tax on property

The Lok Sabha on Wednesday passed the Finance Bill 2024 after the government relaxed the just-introduced new capital gains tax on real estate, allowing taxpayers an option to switch to a new lower tax rate or stay with the old regime that had higher rate with indexation benefit.

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Finance Minister Nirmala Sitharaman, who in her Budget for 2024-25 proposed to lower the long-term capital gains tax on real estate to 12.5 per cent from 20 per cent but without the indexation benefit, moved an amendment to the Bill to give the option. Indexation benefit allows taxpayers to arrive at the cost price of the property after adjusting for inflation. The amendment came after the new provision was criticised for raising tax incidence and disincentivizing investments in the real estate.