NEW DELHI: The federal government on Tuesday proposed important reduction for people who purchased homes earlier than July 23, 2024, by giving them the choice to decide on between two tax charges for long-term capital gains (LTCG) tax.

The Funds 2024-25 had proposed to decrease the LTCG from 20 per cent to 12.5 per cent however eliminated the indexation advantages. The brand new charges have come into impact from July 23, 2024. The indexation profit allowed taxpayers to compute features arising out of the sale of capital belongings after adjusting for inflation.

Tax specialists had mentioned that the proposed adjustments within the Funds would increase the LTCG tax burden.

As per the amendments to Finance Invoice, 2024, circulated to the Lok Sabha members on Tuesday, people or HuF who purchased homes earlier than July 23, 2024, can compute his/her taxes beneath the brand new scheme [@12.5 per cent without indexation] and previous scheme [@20 per cent with indexation] and pay such tax which is decrease of the 2.

After the Funds presentation, the Revenue Tax division mentioned that ‘substantial tax financial savings’ are anticipated for a overwhelming majority of taxpayers as a result of a discount within the long-term capital features tax (LTCG) price in the actual property sector.

As per the adjustments introduced within the 2024-25 Funds, the federal government has retained the indexation profit for taxpayers on properties purchased or inherited earlier than 2001.

Yogesh Kale, Government Director, Nangia Andersen India mentioned by means of the amendments proposed to the brand new capital acquire tax regime launched in Budget 2024, the Finance Minister has tried to appease the taxpayers by addressing the considerations raised to some extent.

“Whereas abolishment of indexation profit continues, properties acquired previous to twenty third July 2024 are proposed to be grandfathered with the choice to the taxpayers to supply the capital acquire tax both at 12.5% with out indexation or 20% with indexation, whichever is extra helpful,” Kale mentioned.

Gouri Puri, Companion, Shardul Amarchand Mangaldas & Co. mentioned This can quell taxpayer considerations round shedding indexation advantages as a trade-off for a decrease long-term capital features tax price.

“Taxpayers can select the extra helpful regime and shouldn’t be worse off due to change in regulation. Considerations round taxation of inflationary features in respect of immovable property acquired previous to a change within the regulation have been addressed,” Puri added.