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The Income tax department has denied reports that people will have to pay higher taxes on profits made on selling a house or land property under the budget proposal of a flat 12.5 per cent tax without indexation.
In a social media post on "X" the income tax department says the proposed new tax rate without indexation is beneficial in most cases. https://x.com/IncomeTaxIndia/status/1815968897058889851 The budget 2024-25 has proposed a flat capital gain tax of 12.5 per cent on capital appreciation on selling property instead of a 20 per cent tax on capital appreciation with indexation benefits. The income tax department in its social media post says nominal real estate returns are generally in the region of 12-16 percent per annum, much higher than inflation. The indexation for inflation is in the region of 4-5 per cent, depending on the period of holding. Therefore, substantial tax savings are expected for a vast majority of such taxpayers. The income tax department has explained that there will be tax savings under the new proposal on properties sold in different time durations. For properties held for five years, the new regime will be beneficial if the property price has appreciated 1.7 times or more. The IT department adds that even if the property is held for 10 years and it has appreciated 2.4 times or more the new tax regime will be beneficial for the taxpayer. If a property is bought in 2009-10 and the value has increased to 4.9 times or more the new tax proposal will be beneficial for the taxpayers. However, the income tax department admits that if the per annum return on property price is less than 9-11 per cent the earlier tax rate of 20 per cent with indexation will be beneficial. The income tax department adds that simplification of any tax structure has the benefits of ease of compliance in computing taxes, filing, and maintaining records. The new proposal has also removed the differential rates of taxes for various asset classes. (ANI)
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