Thinking of buying or selling land?
Property Tax Alert:
Just to let you know, India’s Finance Minister Nirmala Sitharaman, while presenting the Budget for the fiscal year 2024-25, announced several important changes in property tax. One of the key revisions is in the Long Term Capital Gains (LTCG) tax rate, which has been increased from 10% to 12.5%. This change will impact individuals dealing with long-term property investments.
In this, it’s suggested that the impact of inflation on property or gold sales might be adjusted through indexing, which could lead to the tax rate increasing back up to 20%. Additionally, the benefit of indexing in the economy is being completely removed, and a direct tax of 12.5% will now apply. This significant change will have a major impact on all investors.
Special Provisions for Old Properties:
A special provision has been introduced for all significant properties bought before April 1, 2001. The actual cost of these properties will now be determined based on the fair market value at the time of purchase. However, it’s important to note that this provision will not apply to properties purchased after 2001.
Example of the New Calculation Method:
The Income Tax Department has provided a clear example to explain the new method. Let’s say a person buys a property for ₹5,00,000 in 1990. By April 1, 2001, the stamp duty value of the property would have been ₹10 lakh, and its fair market value would have been ₹12 lakh. Now, if the property is sold for ₹1 crore in 2024, the tax will be calculated at the new rate of 12.5%.
Impact on Investors:
This important change will have the most significant impact on citizens investing in real estate and gold. Additionally, with the removal of the indexing benefit, there will be no adjustments for inflation-related factors. Tax transactions may also increase. However, it’s worth noting that the lower tax rate could provide some relief in certain cases.
Government’s Perspective:
The government believes that this important revision will make the system more transparent and simpler, which will help increase tax collection and curb activities like tax evasion. Additionally, applying a uniform tax rate will streamline the entire process, making it much easier to manage.
Future Challenges and Opportunities:
In the upcoming economy, investors may need to make some important adjustments to their investment strategies. According to experts, long-term investments will now require more caution. Additionally, there’s a possibility that investors might consider global investment options as part of their strategy.
Changes Made in Property Tax:
Primarily, this is a significant step towards simplifying the system, but it will directly impact investors. They will need to adjust their investment plans according to the new conditions. However, it’s important that investors fully understand these changes to make informed decisions.
Disclaimer:
This content is for general informational purposes only and should not be considered a substitute for professional advice. For personalized guidance or specific information, please consult an expert. This channel takes no responsibility for the accuracy or outcomes of this information.
