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Am I entitled to indexation benefit for LTCG if I sell my property in June 2024 but registration is pending?

T S Khurana

T S Khurana   |496 Answers  |Ask -

Tax Expert - Answered on Aug 30, 2024

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more
Giridhar Question by Giridhar on Aug 14, 2024Hindi
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Sir , I have decided to sell my residential property by executing agreement on 29th June 2024 , still waiting for registration to complete am I entitled for indexing or not for LTCG tax calculation.

Ans: Under the proposed changes in the budget, you may opt any of the options (in case of Long Term Capital Gains), as under :
(01). Tax Rate 12.50% without indexation OR
(02). Tax Rate of 20% in case of Indexation.
You may calculate your tax liability under both options & may opt for the tax regime, where tax liability is minimum.
Most welcome for any further clarifications. Thanks.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

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Mutual Funds, Financial Planning Expert - Answered on Aug 09, 2024

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I did sale agreement for my flat on 6 may 2024 but sale deed registration was done on 28 July 2024, will i get the indexation benefit in LTCG.
Ans: The Indian Budget 2024 introduced significant changes to the taxation of Long Term Capital Gains (LTCG) on property:

Removal of indexation benefit: This was the initial proposal.
Option to choose: Due to widespread criticism, the government later allowed taxpayers to choose between a 12.5% tax rate without indexation or a 20% tax rate with indexation.  
Key Factors for Your Case
Date of Sale Deed Registration: This is generally considered the date of sale for tax purposes. In your case, it's July 28, 2024.
Option to Choose: Since your sale deed registration is after July 23, 2024 (when the budget changes were announced), you have the option to choose between the 12.5% tax rate without indexation or the 20% tax rate with indexation.
Considerations and Recommendations
Consult a Tax Professional: Due to the complexity of the situation and potential tax implications, it's strongly recommended to consult a tax professional or chartered accountant. They can provide tailored advice based on your specific circumstances.
Analyze Both Options: Calculate the tax liability under both options (12.5% without indexation and 20% with indexation) to determine the most beneficial choice for you.
Consider Other Factors: Factors like the holding period of the property, the purchase price, and other expenses might also influence your decision.
Note: The sale agreement date (May 6, 2024) might not have a direct impact on the tax calculation in this case.

By carefully considering these factors and seeking professional advice, you can make an informed decision and optimize your tax liability.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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