Budget 2024: Property you bought before 2001 will get indexation benefit at the time of sale, government clarifies

The government has clarified that indexation benefits for properties bought till 2001 will continue. This means the price of properties that were bought before 2001 will be taxed after factoring in indexation based on the price in 2001 or price at which it was bought plus indexation till 2001 whichever is lower, explains Revenue Secretary Sanjay Malhotra in a media interaction.

And the properties bought after 2001 will be taxed at a flat rate of 12.5 percent without indexation.

It is noteworthy that Budget 2024 tweaked a number of provisions with regards to capital gains tax with changes made in the exemption limit, rate of tax and indexation benefit.

For more details, you can read this Livemint article.

“Essentially three key changes have been introduced in Budget 2024 with regards to capital gains. These are as follows,” explains Chartered Accountant Deepak Gupta, Founder of Finvestment Pro:

I. Long-term capital gains (LTCG) tax on the sale of listed equity shares, equity-oriented mutual funds and business trust (section 112A) has been raised from 10 percent to 12.5 percent.

II. Long term capital gains on all other long term capital assets (section 112) has been reduced from 20 percent to 12.5 percent but indexation has been removed.

III. Short term capital gain (section 111A) from the sale of listed equity shares, equity-oriented mutual funds and business trust has been increased from 15 percent to 20 percent.

I-T department explains

The set of changes rolled out in capital gains tax are leaving some taxpayers confused with a number of unanswered questions. The income tax department, therefore, has shared an X post on Tuesday evening elucidating the key provisions in an apparent bid to allay the fears and anxieties of taxpayers.

These are some of the points emphasised in the post:

1. Holding period: It has been simplified: Now there are only two holding periods. For listed securities, it is one year and for all other assets, it is two years.

2. Exemption limit: Although the rate of long-term capital gains on listed equity has increased from 10 percent to 12.5 percent, the exemption limit of ₹one lakh has been raised to ₹1.25 lakh.

3. Roll over benefits: There is no change in roll over benefits which are available under the I-T Act. So, the taxpayers who want to save on LTCG tax with low rates can continue to avail the roll over benefits after fulfilling conditions.

4. Implementation: The changes will be implemented with immediate effect i.e, July 23, 2024.