Budget booster for capital gains on property, equity

New Delhi: In what is being billed as a make or break Budget to revive the economy, the Modi government is likely to introduce heavy duty measures for rationalisation of key equity taxes including scrapping capital gains on sale of property, shifting the tax applicability of dividend distribution tax (DDT) to the receiver and extending the timeline of long-term capital capital gains (LTCG) tax from the current 12 months to 24 months. The breakthrough measure, if it materializes, will be doing away with capital gains on sale of property. The move has the potential to revive the real estate sector which is in the doldrums and facing immense stress.

The government is considering a proposal to do away with capital gains on selling of property. Currently, one has to pay 30 per cent capital gains on the sale of a property, if the property holder doesn't re-invest it back in property within 3 years.

If property is sold within 24 months, one has to pay a short-term capital gains tax (STCG) on the gains as per an individual's income-tax slab.

After 24 months, one has to pay an LTCG tax, which is charged at 20 per cent with indexation benefits. Section 54 gives an exemption if there is sale of a property and then another one is bought.