BAJAJ BROKING

Notification
No new Notification messages
One Mobikwik Systems IPO is Open!
Apply for the One Mobikwik Systems IPO through UPI in just minutes.
Open a Free Demat Account
Pay ZERO maintenance charges for the first year, get free stock picks daily, and more.
Trade Now, Pay Later with up to 4x
Never miss a good trading opportunity due to low funds with our MTF feature.
Track Market Movers Instantly
Stay updated with real-time data. Get insights at your fingertips.

New LTCG Tax Options for Homeowners in Budget 2024

Listen to our Podcast: Grow your wealth and keep it secure.

0:00 / 0:00

The Union government has provided significant relief to property owners by introducing a choice between two options for long-term capital gains (LTCG) on property: a 20% LTCG tax with indexation or a 12.5% LTCG tax without indexation. This change, included in the Budget 2024 amendments, allows taxpayers to select the option that minimizes their tax liability, offering flexibility and potential savings.

Major Relief for Homeowners

Finance Minister Nirmala Sitharaman initially proposed reducing the LTCG tax on property from 20% to 12.5%, while eliminating the benefit of indexation in Budget 2024. This change was perceived as a setback for homeowners, as indexation adjusts the purchase cost for inflation, thereby reducing taxable gains and overall tax outgo.

However, following widespread discussions and feedback from the real estate sector, the government introduced amendments allowing property owners to choose between the old and new tax rules.

Understanding the Changes

According to the Finance (No. 2) Bill, 2024, taxpayers can opt for either:

  1. Old Rule: 20% LTCG tax with indexation, or
  2. New Rule: 12.5% LTCG tax without indexation.

This choice ensures that properties bought before July 23, 2024, are not negatively impacted by the new rules, allowing homeowners to calculate their taxes under both schemes and pay the lesser amount.

Who is Eligible?

  1. Eligibility: Individuals and Hindu Undivided Families (HUFs) who purchased properties before July 23, 2024, can choose their preferred LTCG regime.
  2. Property Types: Both residential and commercial properties qualify for this option.

Key Considerations for Homeowners

The decision to opt for indexation benefits or the lower LTCG tax rate should be based on specific financial situations, the holding period of the asset, and the amount of appreciation.

  1. Significant Appreciation: If the property’s value has increased significantly faster than the inflation rate, the 12.5% LTCG tax rate without indexation might be more beneficial.
  2. Long Holding Period: For properties held for long durations with significant inflation, the indexation benefit under the 20% LTCG tax rate could be advantageous.

Benefits of the New Rule

In general, if the property’s value appreciates rapidly, the 12.5% LTCG tax without indexation will likely result in lower tax liability. Conversely, if the appreciation is slower or if there has been significant inflation over a long holding period, the 20% LTCG tax with indexation might be more beneficial.

Conclusion

The new amendments in the Finance Bill, 2024, provide homeowners with a flexible choice to minimize their tax outgo on property sales. Property owners should carefully evaluate their specific circumstances and calculate potential tax liabilities under both the old and new rules to determine the most beneficial option. This strategic choice will ensure optimal tax savings while complying with the latest regulations.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

Share this article: 

Read More Blogs

Our Secure Trading Platforms

Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading

Bajaj Broking App Download

8 Lacs+ Users

icon-with-text

4.4+ App Rating

icon-with-text

4 Languages

icon-with-text

₹4700+ Cr MTF Book

icon-with-text