Budget 2024: Big tax shake-up for property sellers, buyers – Times of India

NEW DELHI: The Union Budget 2024 has launched modifications to the taxation of long-term capital good points (LTCG) arising from the sale of property. The indexation profit, which allowed property homeowners to regulate their buy worth for inflation, has been eliminated. As a substitute, a brand new LTCG tax fee of 12.5% will probably be utilized to the capital good points on the sale of property, with out contemplating the indexation profit.
Right here is an instance from an Financial Time report. As an instance the impression of this modification, think about the next instance: Mr A bought a property for Rs 25 lakh within the monetary yr 2002-2003 and sells it for Rs 1 crore within the monetary yr 2023-2024. Below the earlier guidelines, the acquisition worth of Rs 25 lakh would have been adjusted utilizing the Price Inflation Index (CII) numbers supplied by the Earnings Tax Division. Nonetheless, with the brand new rule in impact, the capital good points will probably be calculated by immediately subtracting the acquisition worth from the sale worth, with none inflation adjustment.

Amit Goyal, Managing Director of India Sotheby’s Worldwide Realty, welcomes this modification, saying, “For actual property transaction, bringing down the long-term capital good points tax from 20% to 12.5% is a welcome step, even when it comes with elimination of indexation advantages. This may encourage extra liquidity in property transactions. Larger uniformity in long run capital good points tax throughout totally different asset courses was an extended standing ask of traders.”
As per the ET report, the finance minister, in her funds speech for 2024, defined the rationale behind this modification, saying, “concurrently with rationalisation of fee to 12.5%, indexation out there underneath second proviso to part 48 is proposed to be eliminated for calculation of any long-term capital good points which is presently out there for property, gold and different unlisted belongings. This may ease computation of capital good points for the taxpayer and the tax administration.”
The Price Inflation Index (CII) is a determine printed yearly by the Earnings Tax Division to calculate indexation advantages. It’s used to find out the inflation-adjusted price of a long-term capital asset, which is then subtracted from the sale worth to reach on the taxable capital acquire. The Central Board of Direct Taxes (CBDT) has notified the CII for the monetary yr 2024-25 (Evaluation Yr 2025-26) as 363, whereas the CII for the earlier monetary yr 2023-24 (Evaluation Yr 2024-25) was 348.
(With inputs from businesses)