As per the amendments, which the minister is expected to move when she replies to the discussion on the bill in Lok Sabha, property purchased prior to July 23, 2024, taxpayers can compute taxes under the new scheme, which is 12.5% without indexation, or 20% with indexation and opt for which ever offers lesser tax outgo.
These amendments have been circulated to members of Parliament and ET has reviewed them.
The move is expected to bring some cheer to taxpayers and industry both that had made a strong pitch for grandfathering for properties acquired prior to July 23, 2024 and giving an option to taxpayers on indexation benefits. ET had reported this in its edition on August 2.
In her July 23 budget, Sitharaman had slashed LTCG tax on property to 12.5% from 20%, while removing the benefit of indexation for properties purchased on or after April 1, 2001. Indexation allow taxpayers to adjust the acquisition cost for inflation before computing capital gains, thereby bringing down the overall tax outgo. A Cost Inflation Index (CII) is notified by the Central Board of Direct Taxes for its computation. There were worries about the retroactive impact for taxpayers
“The proposed change will provide great relief to millions of taxpayers who were left worried about higher tax outgo on prospective sale of older properties… With this move, the Government has really gone out of its way to provide great relief to property owners all across,” said Sudhir Kapadia, senior advisor, EY.Sitharaman has proposed 45 amendments to the finance bill, which she moved for consideration and passage in Lok Sabha Tuesday. The government has raised Rs 2.78 lakh crore from LTCG taxes in the last five years, according to the data shared with the parliament. In the assessment year 2023-24, the Centre collected Rs 98,682 crore from LTCG, compared to Rs 86,075 crore collected for the 2022-23 assessment year.
Content Source: economictimes.indiatimes.com