Government blinks on capital gains tax on real estate

Government offers relief on long-term capital gains tax for immovable property, allowing taxpayers to choose lower tax rate.

In a bid to nip the widespread criticism of the changes in the long-term capital gains tax regime announced in the Budget, the government has decided to grant some relief on the provisions pertaining to taxation of immovable property.

Finance Minister Nirmala Sitharaman had announced in her Budget speech that the tax on long-term capital gains was being reduced from 20% with indexation benefits, to 12.5% without indexation benefits.

Now, it is learnt that the Ministry has incorporated an amendment to the Finance Bill, 2024, to effectively give taxpayers a choice to choose between those two tax rates for immovable assets like land and building acquired before July 23 this year, and pay whichever tax levy works out to be lower in their case.