THE Indian government has relaxed new property tax rules it proposed just two weeks ago, after criticism that the changes added to an already heavy financial burden on the middle class.
On July 23, India lowered the long-term capital gains tax on real estate to 12.5 per cent from 20 per cent, but dropped a benefit that allowed individuals to adjust prices for inflation before the capital gain - and so tax payable - was calculated.
Now the government is offering taxpayers the option of using the new rate or the previous 20 per cent rate with the inflation adjustment, according to a government document.
Real estate assets are considered to be long-term if they have been held for at least 24 months.
The change comes after criticism from opposition parties that prime ninister Narendra Modi's first budget since being reelected was aimed at increasing the tax burden on the middle class.
The newly proposed tax amendment offers property owners two options for calculating their capital gains tax on assets acquired before July 23, 2024.
This revision shifts the cut-off date for capital gains calculations from 2001 to July 23, 2024, addressing concerns raised by long-term property owners. Tax expert Ved Jain explains that for properties acquired before this new date, the tax paid will be the lesser amount calculated under either the new or old system.
Dr. Niranjan Hiranandani, chairman of the Hiranandani Group and NAREDCO, commended the finance minister for this change. He views it as a positive development for the industry, highlighting the flexibility it provides to taxpayers in computing their taxes on long-term capital assets like land and buildings.
This amendment aims to provide relief to property owners while simplifying the tax calculation process, potentially stimulating activity in the real estate market, according to experts.
The federal finance ministry has so far not responded to an email sent outside office hours.
(Agencies)
