According to the Center, investors will ultimately benefit from the plan in the Union Budget 2024–25 to eliminate the indexation benefit from the long-term capital gain computation.
Revenue Secretary Sanjay Malhotra outlined the proposal’s advantages to investors in a media interview while Finance Minister Nirmala Sitharaman’s idea causes controversy.
According to Malhotra, “the capital gain on a property sold for Rs 2 crore today, indexation included, would be approximately Rs 1.40 crore if the property had been bought for Rs 20 lakh in 2005.” The tax on this, if a 20 per cent long-term capital gains tax is applied, would be around Rs 28 lakh. The current plan states that this transaction will result in a total capital gain of about Rs 1.80 crore. The current rate of long-term capital gains tax is 12.5%, and the entire tax liability is Rs 22.5 lakh.”
In addition, he stated that the government has eliminated indexation and lowered the long-term capital gain rate on real estate from 20 to 12.5%. He added that this will help the majority of people.
In the Budget that was presented to Parliament on Tuesday, the administration significantly reduced personal income tax. The tax rate on income up to Rs 10 lakh has been lowered to 10%. The standard deduction was previously Rs 50,000, but it has now been raised to Rs 75,000.
