Homeowners may get a relief as Fin Min weighs tweaks in LTCG provisions: Report

A large number of real estate owners, especially those owning residential real estate property, may see their tax burden go up significantly in the absence of indexation benefits.

Homeowners are likely to get a breather as the finance ministry plans to tweak provisions in the long-term capital gains (LTCG) tax announced in the Union Budget that revoked indexation benefits for unlisted assets, including property and gold.

One of the changes in the works include extending the effective date of the new regime to the next financial year, instead of July 23, the day the Budget was tabled in Parliament, according to a Business Standard report.

Discussions are also underway about grandfathering the purchase of all asset classes, including property, where the indexation provision could apply, the report added.

Moneycontrol couldn't independently verify the report.

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"Some modalities are being worked out in some form in the proposed regime with the intent to provide relief to homeowners," an official privy to the discussions told BS. The official, however, confirmed that no significant change is in the offing.

Discussions on the matter began after the real estate sector gave some data points, claiming that the new tax structure could be harmful for home owners as well as for the industry. "The new changes in the works will be accommodated in the Finance Bill," the official added.

According to industry experts, a large number of real estate owners, especially those owning residential real estate property, may see their tax burden go up significantly in the absence of the indexation benefits.

Indexation adjusts the purchase price of asset for inflation and, hence, it reduces the taxable capital gains. Indexation is done on the basis of the Cost Inflation Index notified by the government.