In the Union Budget, Finance Minister Nirmala Sitharaman announced significant changes to property tax regulations. The long-term capital gains tax on property sales has been reduced from 20 percent to 12.5 percent. However, the indexation benefit for property sales has been removed.
With the removal of indexation, property sellers can no longer adjust the sale price based on the cost inflation index (CII) issued by the Income Tax Department. This change means that the taxable amount on property sales may increase, as sellers cannot inflate the purchase price to reduce capital gains.
Niranjan Hiranandani, chairman of the Hiranandani Group and the realtors’ body NAREDCO, commented, “The reduction in long-term capital gains tax to 12.5 percent without indexation benefits will be closely monitored for its practical impact. However, aligning the holding period for long-term capital gains with that of equity shares by reducing it to 24 months will significantly boost much-needed investment and enhance competitiveness within the sector.”
