Indian government eases new property tax rules after backlashb

High-rise buildings are pictured in India's financial capital Mumbai, July 24, 2024. REUTERS

The Indian government has relaxed new property tax rules it proposed just two weeks ago, after criticism that the changes added to an already heavy financial burden on the middle class.

On July 23, India lowered the long-term capital gains tax on real estate to 12.5% from 20%, but dropped a benefit that allowed individuals to adjust prices for inflation before the capital gain - and so tax payable - was calculated.

Now the government is offering taxpayers the option of using the new rate or the previous 20% rate with the inflation adjustment, according to a government document seen by Reuters.

Real estate assets are considered to be long-term if they have been held for at least 24 months.

The change comes after criticism from opposition parties that Prime Minister Narendra Modi's first budget since being reelected was aimed at increasing the tax burden on the middle class.

The federal finance ministry has so far not responded to an email sent outside office hours.