According to the IT department, the cost of acquiring real estate properties bought prior to 2001 will be equal to either the actual cost of the land or building for the purposes of calculating long-term capital gains (LTCG) tax, or the fair market value (FMV, not exceeding the stamp duty value) as of April 1, 2001.
The LTCG tax on real estate has been lowered from 20% to 12.5% in the FY25 Budget. The advantage of indexation was eliminated, nevertheless, for homes acquired after April 2001.
Thanks to the indexation benefit, taxpayers were able to calculate gains from the sale of capital assets after accounting for inflation.
Fair market valuation, which does not go above the stamp duty value, can serve as the foundation for calculating the indexed price for properties acquired prior to 2001.
After that, the sale price will be deducted from the indexed price to determine the LTCG, which is subject to a 20% tax.
The IT department stated in a post on X that there has been a question about the acquisition cost for properties bought prior to 2001 as of April 1, 2001.
The cost of acquisition as of April 1, 2004, for properties (land, building, or both) acquired before April 1, 2001, is equal to the asset’s acquisition cost to the assessee, or, if available, the fair market value of the asset as of April 1, 2001, not to exceed the stamp duty value.
In an X post on Thursday night, the IT department stated, “Taxpayers can choose either option.
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