• UGI USER
  • Aug 07, 2024
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“GOVERNMENT LOWERS CAPITAL GAINS TAX ON REAL ESTATE”

Why in the news?

The government lowered long-term capital gains tax on real estate from 20% to 12.5%, facing backlash, and allowed taxpayers to choose the more favourable rate for properties acquired before July 23, 2023.

About Tax Reduction and Options:

  • Finance Minister Nirmala Sitharaman announced the long-term capital gains tax reduction from 20% with indexation benefits to 12.5% without indexation.
  • An amendment to the Finance Bill, 2024, will allow taxpayers to choose between the two tax rates.

Relief for Property Transactions:

  • The relief applies to the transfer of immovable assets, such as land and buildings, acquired before July 23, 2023.
  • Taxpayers can select the rate that works out lower for their specific case.
source:scribd
About Capital Gain Tax:

  • Definition: Tax on profit from selling a capital asset.

Types:

  • Long-Term Capital Gains (LTCG): Applies to assets held for over 36 months (24 months for immovable properties).
  • Short-Term Capital Gains (STCG): Applies to assets held for less than 36 months (24 months for immovable properties).
  • Calculation: Gains are taxed in the year the asset is sold.
  • Net Capital Gains: Calculated by deducting capital losses from total capital gains.
  • Realisation: Tax is triggered when the asset is sold, not while it appreciates in value.

Associated Article:

https://universalinstitutions.com/the-social-benefits-of-stock-market-speculation/