New Delhi: The government has announced the removal of indexation benefits on long-term capital gains. Indexation is when a taxpayer can offset the effects of inflation while paying capital gains tax by indexing their investment’s original purchase price. In relation to the sale of real estate purchased prior to July 23 2024 the government decided to give taxpayers the option of paying 20% LTCG tax with indexation benefit.
According to the list of changes made by the government in the Finance Bill taxpayers will also be able to take advantage of the other option included in the Budget which is to pay the tax on long-term capital gains (LTCG) at a reduced rate of 12 percent and without indexation. Of the two options taxpayers can choose to pay the lower tax amount.
However, the amendment makes it clear that only the new regime with LTCG tax at the rate of 12 percent and no indexation will apply to property purchases made after July 23 2024 the cutoff date.
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