Budget 2024: Pay Higher Tax On Sale Of Ancestral Property, Family Gold

The indexation available for calculation of any long-term capital gains which is presently available for property, gold and other unlisted assets is now proposed to be removed, according to the Finance Bill presented in the Parliament on Tuesday.

"This will ease computation of capital gains for the taxpayer and the tax administration," it said.

This may mean that holders of real estate and gold over longer periods, entitled to higher indexation benefit, may have to shell out more money in tax.

Indexation refers to adjustment of price to reflect the affect of inflation.

Previously, long-term capital gains on non-financial assets were taxed at 20% with indexation benefit. From July 23, Finance Minister Nirmala Sitharaman announced that taxes on long-term capital gains on all financial and non-financial assets will be hiked to 12.5% from 10% currently.

However, it raised the limit of exemption of capital gains on some financial assets to Rs 1.25 lakh per year from Rs 1 lakh currently.

"For real estate transaction, bringing down the long-term capital gains tax from 20% to 12.5% is a welcome step, even if it comes with removal of indexation benefits," said Amit Goyal, managing director, India Sotheby's International Realty. 

This will encourage more liquidity in property transactions and higher uniformity in long-term capital gains tax across different asset classes that was a long standing ask of investors, Goyal added.