Finance Minister Proposes Major Relief on Capital Gains Tax for Property Transactions

Finance Minister Nirmala Sitharaman has proposed an amendment to offer taxpayers relief on capital gains tax for property transactions, allowing them to choose between a lower rate of 12.5% without indexation or a higher rate of 20% with indexation for properties acquired before July 23, 2024.

Finance Minister Nirmala Sitharaman has introduced an amendment in the Finance Bill aimed at providing significant relief on capital gains tax for property transactions. The proposed amendment allows taxpayers to choose between a lower tax rate of 12.5% without indexation or a higher rate of 20% with indexation for properties acquired before July 23, 2024.

The new amendments enable taxpayers to compute taxes under both schemes and select the one offering the lower tax burden. Previously, the cut-off date for capital gains calculation was set at 2001, eliciting concerns from long-time property owners. According to tax expert Ved Jain, this move benefits individual and Hindu Undivided Family (HUF) taxpayers but excludes companies and non-resident individuals.

The Finance Bill amendments extend beyond real estate, applying to unlisted equity transactions conducted before July 23, 2024, which will now be taxed at 10% long-term capital gains instead of the proposed 12.5%. This initiative has been praised by industry leaders like Dr. Niranjan Hiranandani, who noted that this measure is poised to boost investment and sales in the real estate sector.