The Crossbill News Desk
On Wednesday (August 7), the Lok Sabha approved a revision to the new property tax rules, just two weeks after they were proposed, in response to criticism that the changes had increased the financial burden on the middle class, Hindustan Times reported.
As part of the annual union budget announced on July 23, Finance Minister Nirmala Sitharaman announced that the long-term capital gains tax on real estate sales would be cut from 20% to 12.5%.
However, the reduction was accompanied by the elimination of a benefit that permitted individuals to adjust property prices for inflation when calculating capital gains for tax purposes. As a result, the profit on each sale increased, leading to a higher tax bill.
Sitharaman announced that the government would now give taxpayers the choice between the new 12.5% tax rate without the inflation adjustment or the old 20% rate with the inflation adjustment, and she sought lawmakers' approval for the amendment, the newspaper reported.
"We have heard the public ... and introduced the tax amendment," HT quoted Sitharaman as saying. The finance minister added that the initial aim was to simplify and standardise the tax rules.
Real estate assets are considered long-term if held for at least 24 months. Properties bought after July 23, 2024, will be subject to the new capital gains tax rate of 12.5%. During the debate on the tax proposals, opposition members argued that Prime Minister Narendra Modi's first budget since his re-election in June was designed to increase the tax burden on the middle class.
According to HT, many tax consultants had also criticized the new tax rule, arguing that removing inflation indexation would disproportionately impact taxpayers selling older properties acquired at lower prices. However, the new tax options are expected to provide relief to thousands of taxpayers concerned about higher tax payments on the sale of older properties, they noted.
As part of the annual union budget announced on July 23, Finance Minister Nirmala Sitharaman announced that the long-term capital gains tax on real estate sales would be cut from 20% to 12.5%.
However, the reduction was accompanied by the elimination of a benefit that permitted individuals to adjust property prices for inflation when calculating capital gains for tax purposes. As a result, the profit on each sale increased, leading to a higher tax bill.
Sitharaman announced that the government would now give taxpayers the choice between the new 12.5% tax rate without the inflation adjustment or the old 20% rate with the inflation adjustment, and she sought lawmakers' approval for the amendment, the newspaper reported.
"We have heard the public ... and introduced the tax amendment," HT quoted Sitharaman as saying. The finance minister added that the initial aim was to simplify and standardise the tax rules.
Real estate assets are considered long-term if held for at least 24 months. Properties bought after July 23, 2024, will be subject to the new capital gains tax rate of 12.5%. During the debate on the tax proposals, opposition members argued that Prime Minister Narendra Modi's first budget since his re-election in June was designed to increase the tax burden on the middle class.
According to HT, many tax consultants had also criticized the new tax rule, arguing that removing inflation indexation would disproportionately impact taxpayers selling older properties acquired at lower prices. However, the new tax options are expected to provide relief to thousands of taxpayers concerned about higher tax payments on the sale of older properties, they noted.
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