Table of Contents
- Restoration Of Indexation Benefit For Long-term Capital Gains- Budget - 2024
- Restoration Of Indexation Benefit For Long-term Capital Gains
- Eligibility For Indexation:
- Indexation Benefit For Firms And Non-individuals:
- Nris And Indexation:
- Application Of Indexation For Exemptions:
- Handling Losses With Indexation:
Restoration of Indexation Benefit for Long-Term Capital Gains- Budget - 2024
Govt of India has proposed that indexation benefit under Long-Term Capital Gains will be restored for immovable property bought before July 23, 2024. As per the provisions, the Long-Term Capital Gains tax would be calculated at the rate of 12.5 % without indexation, but if it exceeds 20 % with indexation, it would be ignored.
The above changes are part of the government's broader effort to simplify the capital gain tax Income tax law, as outlined in the Finance Bill Budget 2024 memorandum. Here's a clear explanation of recent announcements regarding indexation benefits for Long-Term Capital Gains on land and buildings, This summary provides a clear understanding of how the indexation benefits have been adjusted and the limitations associated with them.
Restoration of Indexation Benefit for Long-Term Capital Gains
Announcement by Hon. FM: The Finance Minister has restored the indexation benefit for Long-Term Capital Gains (LTCG) on the transfer of land and buildings purchased before 23rd July 2024. Tax liability will be calculated at either 12.5% without indexation or 20% with indexation, whichever results in a lower tax.
Eligibility for Indexation:
- Only land and buildings purchased on or before 22nd July 2024 are eligible for the restored indexation benefit.
- Other assets, such as jewelry, are not eligible for indexation under the new provisions.
Indexation Benefit for Firms and Non-Individuals:
- The indexation benefit has been restored exclusively for individual taxpayers and Hindu Undivided Families.
- Properties owned by firms, companies, or associations are not eligible for this benefit.
NRIs and Indexation:
- Non-resident individuals do not qualify for the restored indexation benefit. The benefit is limited to resident individuals and Hindu Undivided Families.
Application of Indexation for Exemptions:
- Although indexation is available for tax calculation purposes, it cannot be used for determining the amount of reinvestment required for exemptions under Sections 54, 54B, and 54EC.
- Exemptions must be based on capital gains without applying indexation.
Handling Losses with Indexation:
- If there is a capital loss after applying indexation, this loss cannot be carried forward or adjusted against other capital gains. The indexation is solely for tax calculation and not for loss determination or investment comparisons.
