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The relief is proposed in respect of the taxation of immovable property:
“In the case of transfer of a long-term capital asset, being land or building or both, by an individual or HuF, which is acquired before the 23rd day of July, 2024, the taxpayer can compute his taxes under the new scheme [@12.5% without indexation] and old scheme [@20% with indexation] and pay such tax which is lower of the two.”
Not just real estate indexation, the government has also proposed to revert to 10% LTCG for unlisted securities bought before July 23. The Finance Bill had proposed raising it to 12.5%.
“the amount of income-tax on long-term capital gains arising from the transfer of a capital asset, being unlisted securities or shares of a company not being a company in which the public are substantially interested, as computed without giving effect to the first and second provisos to section 48, calculated on such long-term capital gains,— (A) at the rate of ten per cent, for any transfer which takes place before the 23rd day of July, 2024; and (B) at the rate of twelve and one-half per cent, for any transfer which takes place on or after the 23rd day of July.”
It must be noted that the LTCG relief is applicable only to immovable assets, i.e. house, land, buildings and unlisted securities. No LTCG relief is proposed for listed equity shares and equity-oriented mutual funds.
The amendment to the Finance Bill comes after CNBC-TV18 reported on representations pouring in at North Block regarding the recent budget announcements on the removal of the real estate indexation.
Finance Minister Nirmala Sitharaman announced the withdrawal of indexation benefits from real estate and lowered the long-term capital gains (LTCG) tax from 20% to 12.5% in the Union Budget presented on July 23.
Indexation adjusts the purchase price of an asset for inflation, thereby reducing the gains and ultimately the tax liability.
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