Blitz Bureau
NEW DELHI Amid the confusion over the Government eliminating the indexation benefit on calculating long-term capital gains tax (LTCG) on property some experts clarified saying even in property, new tax rate at 12.5 per cent (without indexation) would be better than previous regime (20 per cent with indexation).
The LTCG on property sales has been reduced from 20 per cent to 12.5 per cent. However, the Union Budget’s fine print revealed that indexation benefits on real estate have been removed, along with gold and other unlisted asset classes.
“With the rationalisation of rate to 12.5 per cent, indexation available under the second proviso to Section 48 is proposed to be removed for calculation of any long-term capital gains, which is presently available for property, gold and other unlisted assets. This will ease computation of capital gains for the taxpayer and the tax administration,” the budget document read. Indexation adjusts the purchase price of an asset for inflation, reducing taxable profits and tax liabilities. Without this adjustment, taxpayers may face increased taxes despite the lower LTCG rate.
