ITR filing: Here’s why July 23, 2024 cut-off date matters

New Delhi, July 23 July 23, 2024 is a landmark date when it comes to assessing your tax liability for the current assessment year (AY 2025-26) and taxpayers should be aware of this cut-off date prior to submitting their ITR.

Taxpayers who sold their property, plot of land, or even shares during the financial year 2024–25, can choose between old regime (with indexation) or new regime (without indexation).

For the unversed, the indexation benefit brings down the tax liability of a citizen by adjusting the original cost of acquisition of a capital asset for inflation.

This means any asset bought after July 23, 2024, attracts tax on its entire acquisition cost. you could inflate the purchase price of the property based on inflation, reducing the gain and thus your tax liability.

So here's how the tax calculation changed.

If you bought property after July 23, 2024, and sell it later, you must use the new flat LTCG regime at 12.5 per cent without indexation, with a Rs 1.25 lakh exemption on the gains, according to experts.

In case the property was bought before this cut-off date and sold later, you may opt for either the old taxation scheme (20 per cent LTCG with indexation) or the new method, whichever is more beneficial.

While the rate under old taxation scheme (20 per cent) seems higher, the taxpayer can adjust for inflation. But these rates only apply if you sell the property after 2 years; otherwise, short-term capital gains and gains will be added to your total income and taxed at your individual income tax slab rate, they noted.

Since the enactment of the Finance (No. 2) Bill, 2024, the holding period to determine whether an asset qualifies for long-term capital gains (LTCG) has been simplified. It’s now just 1 year for listed securities, and 2 years for all other capital assets. Previously, the holding period varied from one year for equity to 36 months for gold, unlisted securities, debt funds, etc.

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