Government Reinstates Indexation Benefit for Property Sales After Backlash
In response to widespread criticism, the government has reversed its decision to eliminate indexation benefits on long-term capital gains (LTCG) from property sales. As of Tuesday, taxpayers will have the option to choose between two tax regimes for properties acquired before July 23, 2024. Additionally, all properties purchased before the Budget presentation date—July 23—have been grandfathered. In the original proposal, there was no grandfathering for properties bought after April 1, 2001. What’s Changed? Under the updated rules, property owners can now select between: 20% LTCG Tax with Indexation : This allows for adjusting the purchase price of an asset for inflation, thus reducing taxable capital gains. 12.5% LTCG Tax Without Indexation : This option offers a lower tax rate but does not account for inflation adjustments. Taxpayers can choose the option that results in the lower tax liability. Why the Change? The initial proposal to remove indexation benefits while offering a lower...