Revision In Real Estate LTCG Tax Done After Feedback, No Additional Burden, Says Sitharaman
'We are telling taxpayers, you calculate and pay tax on whichever is lower,' Sitharaman said.
Finance Minister Nirmala Sitharaman said on Wednesday that the amendment in the budgetary proposal to give taxpayers the option to choose between two sets of long-term capital gains tax on the sale of property has been introduced following public feedback and vowed there will be no additional tax burden after the changes.
The government a day prior moved an amendment to the Finance Bill, 2024, to let taxpayers select either a 12.5% LTCG tax rate without indexation or a 20% rate with indexation for property acquired before July 23, 2024.
In the Union budget for 2024, the tax on LTCG was slashed to 12.5% from 20%. However, the indexation benefit on real estate transactions for properties bought in and after 2001 was scrapped.
"The logic of the budgetary proposal on capital gains tax is that it has to be standardised, simplified and treat all asset classes equally," the Finance Minister said in Lok Sabha.
"The taxpayer can now compute taxes under the new scheme of 12.5% without indexation or the old scheme of 20% with indexation and pay such tax, which is the lower of the two. We are telling taxpayers, You calculate and pay tax on whichever is lower," Sitharaman said.
Further, rollover provisions will continue to exist if capital gains are invested in more than one property, she said.
She asserted there was no revenue consideration for removing the indexation provision, and the intent of the government was to bring in simplification and treat all asset classes equally.
"Simplification and ease of compliance for the taxpayer have been the primary objectives in the last 10 years. Our approach has been to bring in greater simplification of tax laws and procedures and enable growth and employment in the country," the Finance Minister said.
