Finance Minister Nirmala Sitharaman announced the Union Budget 2024 on Tuesday, removing the indexation benefit for the sale of property and gold. The indexation benefit allowed taxpayers to adjust the purchase price of long-term capital assets for inflation. After its removal, the tax liability is bound to increase. Earlier, the tax on long-term gains for property sale was 10 per cent.
The government, however, cut the LTCG tax rate on the two things from 20% to a flat 12.5%. Moreover, the holding period required for gold to qualify as long-term capital gains (LTCG) has been reduced from 36 months to 24 months. Short-term capital gains (STCG), gold sold within 24 months, will continue to be taxed at the applicable income tax slab rate.
After the withdrawal of the indexation benefits, the Nifty Realty Index fell by about 2.6 per cent. DLF stock also fell 6 per cent to Rs 778. Later, it improved and closed at Rs 809. Apart from this, Macrotech Developers fell by about 3 per cent, Godrej Properties by 5 per cent, Prestige Estates and Phoenix Mills by about 2 per cent.
During the budget speech, the Finance Minister said that she wants to simplify the capital gains tax regime. She has increased the short-term capital gains on some assets to 20 per cent. The Finance Minister has also increased the long-term capital gains tax from 10 per cent to 12.5 per cent. The exemption limit under long-term capital gains has been increased from Rs 1 lakh to Rs 1.25 lakh.
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