The Lok Sabha passed the Finance Bill on 7 August 2024 with an amendment to the long-term capital-gains (LTCG) rules for immovable property. The change, now part of the Finance (No. 2) Act, 2024, set a 12.5% rate for applicable transfers on or after 23 July 2024 while adding a limited tax comparison for certain land and buildings acquired before that date. It followed criticism that the Budget proposal’s removal of indexation could increase tax incidence and discourage real-estate investment; those concerns were reported at the time, not established as measured outcomes.
What changed in the Finance Bill
The Lok Sabha passed the Finance Bill on 7 August 2024 after the government added an amendment to section 112. The Finance (No. 2) Act, 2024 made the change effective from 23 July 2024. The enacted text sets a 12.5% LTCG rate for applicable transfers on or after that date; the earlier 20% rate applies to applicable transfers before it. The Income Tax Department’s statutory text sets out the amended provision.
The rate is part of the broader section 112 LTCG framework, not a rate that applies only to property. The amendment’s property-specific feature is a comparison safeguard for qualifying land or buildings acquired before 23 July 2024.
How the property comparison works
For a qualifying property, the calculation under the amended approach—12.5% without indexation—is compared with the calculation under the preceding provisions—20% with indexation. If the new-law calculation produces more tax, the excess is ignored. In practical terms, the safeguard prevents the eligible taxpayer’s liability from exceeding the old-method amount in that comparison; it does not automatically put every property sale under the old method. The Income Tax Department describes the limited protection in its current guidance.
#1 Best Overall
Who and what may qualify
- Taxpayer: The Department describes the protection as applying to resident individuals and Hindu undivided families (HUFs).
- Asset: It concerns land or buildings.
- Acquisition date: The property must have been acquired before 23 July 2024.
- Comparison outcome: The safeguard matters when the 12.5% calculation without indexation exceeds the tax under the former 20% calculation with indexation.
These conditions make the rule a limited protection, not a general restoration of indexation or an unrestricted choice between methods for every taxpayer, asset, or sale.
What indexation means
Under the earlier method, indexation adjusts the property’s cost for inflation when computing the taxable gain. Because the indexed cost can reduce the gain on which tax is calculated, the 20% rate cannot be compared with 12.5% in isolation: the two methods can use different taxable-gain amounts.
Why the amendment drew attention
Contemporaneous coverage reported criticism that the Budget proposal to remove indexation could raise the tax incidence for property sellers and disincentivize real-estate investment. The amendment addressed the concern for a defined group of pre-cutoff property acquisitions. The reporting does not establish that the original proposal actually raised taxes overall or reduced investment, and the statutory safeguard alone does not prove either outcome. The Economic Times reported on the passage and the criticism on 7 August 2024.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to read the rule for a specific sale
A sale’s treatment depends on the transfer date, the property’s acquisition date, the seller’s status, and the tax result under each calculation. The headline rate alone does not establish which method leads to a lower bill. For a specific Indian property transaction, consult a qualified Indian tax adviser who can assess the facts and applicable provisions.
Quick wins for a faster PC:
Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Quick Recap
Best Value
Rank #3
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
