The indexation bonus for homes bought before July 23, 2024 will be given again by the Indian government. This is a big policy change.
The benefit of indexation can be taken back.
A lot of people didn’t like how the Budget planned to get rid of long-term capital gains (LTCG) indexation benefits. This move comes after that one. Capital gains are taxed less when they are indexated, which means that the price of an item changes to reflect inflation. This is good for taxes.
There are two ways to pay tax.
People who bought homes before the deadline now have two ways to figure out their LTCG tax. This is because the Finance Bill was changed. They can pay either 12.5% LTCG tax or 20% LTCG tax with indexation. People who pay taxes will be able to pick the option that cuts their bill. With this extra freedom, people who were worried that the first plan would make it harder for people to sell their homes will no longer have to.
The New Regime and Its Background
People who own or trade in real estate were against the first Budget plan because they thought it would mean they would have to pay more taxes because indexation benefits would be changed. There will be no changes to the 12.5% tax rate because the government said it would be good for most deals. One big problem, though, was that houses bought before April 1, 2001, did not have a “grandfathering” clause. The most recent change protects homes that were bought before July 23, 2024, by using the old tax rules for these deals.
What it means for the housing market
When people sell their houses, the change should help them because they would have had to pay more in taxes before. There are still concerns, though, that there might be more deals on the secondary market and that people might lie about the prices of their homes to lower their tax bills. If you roll over your capital gains and reinvest them, the government has made it clear that the benefits will not change. Section 54EC stocks will still be safe.
More Implications for Everyone
The changes include adding false claims of exemptions to the list of things that count as “undisclosed income” for block taxes. Tax evasion will end with this broader meaning, and everyone will follow the rules. People and businesses gave the Finance Ministry ideas for changes, which were then made. The need for tax reform and the wants of property owners and investors are both met by these changes.
