Govt Reverses Decision: Indexation Benefits Restored For LTCG Tax

The government has reversed its controversial decision to remove indexation benefits for long-term capital gains (LTCG) tax on property sales. Taxpayers now have a choice between a lower tax rate without indexation or a higher rate with indexation for properties bought before July 23, 2024.

Grandfathering for Existing Property Owners

Relief for Pre-2024 Purchases: All properties acquired before July 23, 2024, are now grandfathered, meaning indexation benefits can be claimed.

Choice of Tax Regimes: Taxpayers can opt for either the new 12.5% tax rate without indexation or the old 20% rate with indexation, choosing the option that results in lower tax liability.

Government U-Turn

Initial Stance: The government had initially defended the removal of indexation, arguing that the lower tax rate compensated for the loss.

Public Backlash: Widespread criticism from real estate investors and property owners led to the government’s decision to restore indexation benefits.

Impact on Taxpayers

Significant Relief: The reversal is expected to provide substantial relief to taxpayers.

Alignment with Public Sentiment: The government’s decision reflects a response to public opinion and concerns raised by industry stakeholders.