The proposals made in the budget regarding property tax had given a big shock to the investors of the real estate sector. Now such news is coming which can bring relief to them. It is being said in the news that the government is considering some changes in the proposals made in the budget on capital gains tax and indexation.
Will we get the benefit of indexation for one more year?
According to a report by Business Today TV, the government may postpone the decision to implement the proposal made in the budget to end the benefit of indexation on property sales for some time. Quoting sources, the report said that the benefit of indexation will continue to be available in this financial year. The changes made in the budget can be implemented from the next financial year i.e. FY 2025-26. If this happens, real estate investors will get about a year to take advantage of indexation, so that they can sell the property and withdraw their investment.
The decision may be postponed till next financial year
Similarly, another change can be made regarding long term capital gain tax. Finance Minister Nirmala Sitharaman had proposed in the budget that the rate of long term capital gain tax on sale of property should be reduced from 20 percent to 12.5 percent. This decision can also be postponed till the next financial year. The changes to reduce the rate of LTCG on property and abolish the benefit of indexation have come into effect from the day of the full budget i.e. 23 July 2024.
There are speculations about 2 such options
It is also being claimed in the news that the government can give two options to property investors. One option can be that the investor pays LTCG at the rate of 20 percent on the capital gain from the sale of the property. In this case, they will get the benefit of indexation. In the second case, there will be an option to pay tax at the reduced rate of LTCG i.e. 12.5 percent, but then the benefit of indexation will not be available.
The Finance Ministry has not confirmed
However, nothing has been decided yet. The Finance Ministry has not officially said anything about these changes. Such news running in a section of the media is based on sources. In such a situation, until they are officially confirmed, all things will be considered mere speculations.
Government earns huge amount from LTCG
Long term capital gain tax has proved to be a major source of income for the government. In the last 5 years, the government has earned Rs 2.78 lakh crore from LTCG. In the assessment year 2023-24 alone, the government received a revenue of Rs 98 thousand 682 crore from long term capital gain tax.
This is why there is opposition to the changes
The recent changes made in the long term capital gain tax are expected to increase the government’s income further. At the same time, analysts and investors say that the changes made in the budget will now result in higher tax liability on selling property. This is the reason why analysts are criticizing the changes proposed in the budget and voices have been raised against them in the Parliament as well.
Also read: Income Tax Department clarified on ending indexation on selling property, said – there will be benefit from reduction in LTCG rate