The government on Tuesday proposed significant relief for individuals who bought houses before July 23, 2024, allowing them to choose between two tax rates for long-term capital gains (LTCG) tax.
The Budget 2024-25 had initially proposed reducing the LTCG rate from 20% to 12.5% but removed indexation benefits, which allow taxpayers to adjust gains for inflation. The new option comes into effect from July 23, 2024, enabling taxpayers to compute taxes under the more beneficial regime without being worse off due to the change in law.
Tax experts had previously noted that the proposed Budget changes could increase the LTCG tax burden, but the amendments now address concerns around taxation of inflationary gains for immovable property acquired before the law change.
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