Sold property for Rs 43.5 lakh: Which allows lower tax outgo, LTCG with or without indexation?

Last year, Finance Minister Nirmala Sitharaman provided significant relief to homeowners by modifying the long-term capital gains (LTCG) tax regulations for property outlined in Budget 2024. Initially, the budget proposed reducing LTCG tax from 20% to 12.5% whilst eliminating indexation benefits.

This change would have adversely affected homeowners, as indexation permits taxpayers to account for inflation when calculating capital gains, thereby reducing their tax burden.

For individuals who purchased property before July 23, 2024, there will be flexibility to select between the revised regulation (12.5% LTCG tax without indexation) and the existing regulation (20% LTCG tax with indexation), allowing them to opt for whichever results in lower taxation.

Property owners will now have two distinct choices when selling their properties, enabling them to select the option that minimises their tax obligation: