The new capital gains tax rules, effective from July 23, 2024, altered the calculation of capital gains by eliminating the indexation adjustment for inflation.
The Ministry of Finance is reviewing several options concerning the revised Long Term Capital Gains (LTCG) regime, which recently eliminated indexation benefits for property, gold, and other unlisted assets.
Read More:- Gautam Adani unveils succession plan: Stepping down in 8 years, sons to take over in early 2030s
These changes are aimed at revising how capital gains are taxed but may see some adjustments before the Finance Bill 2024-25 is passed in Parliament.
According to sources cited by Business Today TV, one proposal is to implement the indexation change from FY26 rather than the current financial year. This adjustment would give property owners more time to plan their sales and manage the potential tax implications.
Read More: Zomato collected Rs 83 crore In Platform Fee From Customers Till March: Details Here
The new capital gains tax rules came into effect on July 23, 2024. These rules introduced significant changes to the way capital gains are calculated, removing the ability to adjust the acquisition cost for inflation, known as indexation. This could impact the tax liability for individuals selling their property, gold, or other unlisted assets.
An alternative proposal under review is to offer property sellers a choice between a 20% tax rate with indexation benefits or a 12.5% rate without indexation, as outlined in section 112 of the Income Tax Act.
Read More: Gold Rate Today: Check 22 Carat Price In Your City On August 05
However, some officials are concerned that this could complicate the tax process. “The rationale is to simplify and not complicate,” an official noted.
While there are no plans to reverse the decision entirely, there may be adjustments made to soften the impact based on feedback from industry stakeholders.
The indexation benefit allowed taxpayers to adjust the cost of their assets for inflation before calculating capital gains, which reduced their tax burden. The Cost Inflation Index (CII), issued by the government, was used for this purpose.
Read More: Petrol, Diesel Fresh Prices Announced: Check Rates In Your City On August 5
Union Finance Minister Nirmala Sitharaman addressed the issue at the post-Budget Conclave of Business Today-India Today, questioning why different asset classes, such as gold, stocks, and property, were treated differently. She suggested that a simpler, more uniform approach could be beneficial.
Over the past five years, the government has raised Rs 2.78 lakh crore from LTCG taxes. For the assessment year 2023-24, the Centre collected Rs 98,682 crore from LTCG, up from Rs 86,075 crore collected for the 2022-23 assessment year.
