LTCG Tax
The long-term capital gains (LTCG) tax system in India underwent significant changes in the Union Budget 2024-2025, notably eliminating the indexation advantage. Indexation adjusts an asset’s acquisition price for inflation, reflecting a more accurate cost. The new regime lowers the LTCG tax rate from 20% to 12.5% and removes indexation for assets like gold and real estate, using fair market value for pre-2001 assets to reduce tax on inherited properties. While the government argues this streamlines the tax system and benefits most taxpayers, critics point out the lack of grandfathering clauses, potentially increasing tax bills for long-term investors. The government claims the lower tax rate compensates for this change.
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