Even though the indexation advantage has been eliminated, it may still be used to calculate tax obligations on buildings and property purchased by residents and resident HUFs and sold on or after July 23, 2024.
LTCG Tax Simplified Guide
For properties sold on or after July 23, 2024, the capital gain regulations have changed. For FY2025-26, the Ask Wallet Wise inquiry today decodes the income tax regulations governing the calculation of capital gains.
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I want to know how much LTCG tax I must pay at the very least when I sell an apartment. The rates of 20% and 12.5% are confusing to me. Since its acquisition on October 9, 2017, the property has been up for sale.
Professional Guidance:
The 2024 budget included significant adjustments to the capital gains tax system. The elimination of the indexation advantage for calculating long-term capital gains was the most important of them.
Prior until this, a capital asset had to meet three distinct holding time criteria in order to qualify as a long-term capital asset. The holding term required for equity-oriented schemes and listed securities was more than a year. It was two years for land and buildings and unlisted shares, and three years for the remaining capital assets.
There are now two holding time requirements of more than one year and more than two years for this reason, as a result of the July 2024 budget amendment that reduced the holding period requirement for the remaining capital assets to more than two years.
Long-Term Capital Gains Rules
Even though the indexation advantage has been eliminated, it may still be used to calculate tax obligations on buildings and property purchased by residents and resident HUFs and sold on or after July 23, 2024. The taxpayer may choose to pay tax on the long-term capital gain at a rate of 20% on indexed long-term capital gains or 12.50% on unindexed long-term capital gains in this situation.
The earnings would be considered long-term capital gains since you had owned the apartment for more than two years. For income tax reasons, I have presumed that you are an Indian resident.
LTCG Tax Payment Options
You may choose to pay tax at 12.50% on unindexed long-term capital gains or at 20% on indexed long-term capital gains since the apartment was purchased before July 23, 2024, and the proceeds constitute long-term capital gains.
Please be aware that this benefit can only be used to calculate the tax liability and not for other purposes, such as figuring out the amount to be invested in order to claim an exemption for long-term capital gains or figuring out the income threshold for applying the surcharge liability.