GoI Relaxed Long Term Capital Gains Rules for Property Owners

Current Context: The Government of India has recently relaxed the long-term capital gains (LTCG) tax rules for property owners.

• Here are the key changes:
• Two Tax Options: Property owners can now choose between:
• Option 1: Pay a 20% tax on capital gains after adjusting the purchase price for inflation (indexation).
• Option 2: Pay a 12.5% tax on capital gains without any indexation adjustment.
• Applicability: This relief is applicable only to properties acquired before July 23, 2024.
• Flexibility: This change provides flexibility to property owners, allowing them to select the option that results in a lower tax liability.
• These adjustments aim to balance the tax burden and provide relief to property owners who were affected by the previous changes in the LTCG tax rules.

Question:

1 What are the two tax options available for property owners under the newly relaxed LTCG tax rules?

• A) 15% tax with indexation and 10% tax without indexation
• B) 18% tax with indexation and 12% tax without indexation
• C) 25% tax with indexation and 15% tax without indexation
• D) 20% tax with indexation and 12.5% tax without indexation

Answer: D) The new rules allow property owners to choose between paying a 20% tax on capital gains with indexation or a 12.5% tax without indexation.