Published: 25th July 2024
By: Value Research
During yesterday’s Union Budget, the finance minister announced a uniform LTCG (long-term capital gains) tax of 12.5%, applicable for both financial and non-financial assets.
This may come as a relief for investors since non-financial assets like real estate previously attracted an LTCG tax of 20%. However, the government has done away with indexation benefits, which enabled gold and property sellers to lower their taxable gains.
Indexation enables investors to adjust the purchase price of an asset for inflation, helping them reduce the tax burden on capital gains when the asset is sold.
How can the removal of indexation benefits affect your tax outgo?
Indexed purchase price = (Cost price/CII for the year of purchase) X CII for the year of sale
^CII for 2014-15 and 2024-25 is 240 and 363, respectively.
It isn’t necessary that the loss of indexation will hurt property sellers at all times, as the tax outgo will vary on a case-to-case basis, depending on the exact purchase/sale price and time. You can read the full story here:
If you want to know which tax regime suits you best, we suggest you read our full story by clicking the link below.