The Union government has made a significant change regarding the taxation of real estate. Initially, the government announced the removal of indexation benefits in the Union Budget 2024, lowering the Long-Term Capital Gains (LTCG) tax from 20% to 12.5%. However, in a recent development, the government has amended the Finance Bill to reinstate the option for taxpayers to choose between calculating capital gains tax with or without indexation.
This change offers taxpayers flexibility. They can now calculate their tax liability at 12.5% without indexation or at 20% with indexation, effectively bringing back the old indexation benefits. Indexation plays a crucial role in adjusting the purchase price of an asset for inflation, ultimately reducing the capital gains and the corresponding tax liability.
This decision provides relief to those who have purchased property before July 23, 2024, as they now have the option to utilize the indexation benefits to reduce their tax burden. This move is likely to be welcomed by the real estate industry and property owners.
