Centre modifies long term capital gains tax,Relief for homeowners

In a relief to property owners, the government on Tuesday proposed an amendment to the long-term capital gains (LTCG) regime, which will allow taxpayers to choose between a lower tax rate of 12.5 per cent without indexation or a higher rate of 20 per cent with indexation for properties acquired before July 23, 2024.As per the proposed amendment, taxpayers who sold assets such as land or buildings before July 23 have the option to choose between the new and old tax regimes, allowing them to select the one that offers a lower tax liability.The new LTCG regime offers a 12.5 percent tax rate without indexation benefits, while the old slab imposes a 20 per cent tax rate but allows for indexation benefits.The indexation benefit allowed taxpayers to compute gains arising out of the sale of capital assets after adjusting for inflation.
As per the amendments to Finance Bill, 2024, circulated to the Lok Sabha members on Tuesday, individuals or HuF who bought houses before July 23, 2024, can compute his/her taxes under the new scheme [@12.5 per cent without indexation] and old scheme 20 per cent with indexation] and pay such tax which is lower of the two.Indexation is a method used to adjust the gains from property sales by accounting for inflation during the ownership period. This adjustment is made using the cost price index.