Finance Minister Nirmala Sitharaman on August 7 said that the government's decision to remove indexation benefits from real estate and lowered the long-term capital gains (LTCG) tax from 20 percent to 12.5 percent was not due to revenue consideration but due to simplification.
The clarification from the FM comes a day after the government moved an amendment allowing long-term capital gains taxes on property purchases made before July 23, 2024, to be calculated under the new 12.5 percent rate without indexation and the old 20 percent rate with indexation and allowing taxpayers to choose the more favourable option.
In a reply to Lok Sabha, Sitharaman added that this LTCG option on real estate is aimed at no additional tax burden for taxpayers.
"The logic of the budgetary proposal on capital gains is that it has to be simplified and to treat all asset classes equally," she added.
Current amendment asset acquired before July 23 can compute tax under the old scheme with indexation or new scheme and pay the lower tax, she said, adding that amendments in budget are brought in even later so that it is representative of common people's aspirations.
Further, attacking the opposition, Sitharaman said, discussions on capital gains tax have been "twisted and turned."
We have yielded to the voices, she said.
In Budget 2024, Finance Minister Nirmala Sitharaman announced the withdrawal of indexation benefits from real estate and lowered the long-term capital gains (LTCG) tax from 20 percent to 12.5 percent. Indexation adjusts the purchase price of an asset for inflation, thereby reducing the gains and, ultimately, the tax liability.
The move to remove indexation benefits for the real estate sector irked many with some terming it as an anti-middle class decision.
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