Lok Sabha Passes Bill to Amend Long-Term Capital Gains Tax on Real Estate

New Delhi: The Lok Sabha on Wednesday passed the Finance Bill 2024, incorporating significant amendments to the newly introduced capital gains tax on real estate.

The Centre, responding to criticism, has provided taxpayers with the choice to switch to a lower tax rate or retain the existing regime.

Finance Minister Nirmala Sitharaman, in her Budget for 2024-25, initially proposed reducing the long-term capital gains (LTCG) tax on real estate from 20% to 12.5% but without the indexation benefit. Following backlash, she amended the bill to allow taxpayers who purchased properties before July 23, 2024, to opt for the new 12.5% rate without indexation or continue with the 20% rate with indexation, which adjusts the property cost for inflation.

The amendment aims to alleviate concerns about increased tax burdens and potential deterrents to real estate investment. The Lower House passed the bill, including 45 official amendments, via a voice vote.

The Finance Bill 2024 now moves to the Rajya Sabha for discussion. However, under constitutional provisions, the Upper House cannot reject a money bill. If the Rajya Sabha does not return the bill within 14 days, it is considered approved.