New Delhi. Union Finance Minister Nirmala Sitharaman made a big announcement regarding property tax in the budget. The central government has reduced the long term capital gain tax (LTCG) on property sale by 7.5 percent to 12.5 percent but has removed the indexation benefit on it. But now the government has issued a new clarification in this regard. It has been clarified by the Finance Ministry that the indexation benefit will be applicable on properties purchased before the year 2001. Due to the facility of indexation benefit, the tax liability on the profit made from selling the property is reduced.
The Finance Minister had earlier announced a standard long term capital gain tax. According to this, a long term capital gain tax of 12.5 percent will have to be paid on selling any type of property. But now the government has provided some relief by clarifying this. Indexation benefit will be applicable on properties purchased before the year 2001. According to a report by Times of India, two different categories have been created for those selling property in the budget. The first category includes properties purchased before 2001 or inherited by the family. While the second category includes properties purchased after 2001. This will now provide relief to those who have property before 2001.
Let us tell you that after selling any property, the profit made by the seller is calculated by indexation benefit. Till now, 20 percent long term capital gain tax is levied on this profit amount, which has now been reduced by 7.5 percent to 12.5 percent. For indexation benefit, the Cost Inflation Index (CII) issued every year by the Income Tax Department is used. On the basis of this data, the purchase price of the property is estimated by the adjusted price of the current rate of inflation.