Vachan Singh, FRICS, ICF’s Post

💡 In my view let’s not talk about whether it will reduce the tax or increase (because it depends on case to case) but more importantly, indexation concept holds a logic specially while computing Long Term Capital Gain on real estate . 💡If Government has to remove that, they must come up with some rationale or logic which overrides the prevailing one. Without logic just by reducing tax from 20% to 12.5% does not solve the purpose. 💡Additionally, please note, the rate of 12.5% can anytime be increased by the government after 3-5 years and taxpayers will, by then, forget they are in the same tax rate (20%) but now without indexation. So in my view this change has significant impact without any need.

The demand for real estate in India is not going down, nor are the prices. The removal of indexation will inevitably increase the flow of black money. The basic maths show that the only way the new scheme benifits in comparison with Old is when the value of property grows at CAGR of 12.5%. Which itself is questionable. The change might be benifitting CAs with increased complexity in structuring the sale of property transactions (iykyk), but the MoF's intent of simplifying taxes for common people is definitely contentious.

The Indian Government should really consider reapplying indexation. Not only Real estate Investors but all the investors who are investing for Long Term will face a huge challenge just in terms of LTCG Tax. one side Mutual fund industries are promoting to invest in Mutual Fund for the long term but with this step they will definitely lose the interest and shift to FD and PPF.

so apt explanation..!!

Brilliantly corroborated about the impact of removal of Indexation and subsequent consequences.

Well said by Raghav Chadha Ji. Here are the few pros and cons of removing indexation from capital gains in India: Pros: 1. Simplified Tax System: - Ease of Calculation: Simplifies the calculation of capital gains tax by eliminating the need to adjust the purchase price for inflation. - Reduced Paperwork: Decreases the administrative burden for taxpayers and tax authorities, as fewer records and calculations are required. 2. Increased Tax Revenue: - Higher Tax Collection: Potentially increases tax revenue as taxpayers can no longer adjust their capital gains for inflation, resulting in higher taxable amounts. 3. Equal Treatment: - Uniform Tax Policy: Creates a more uniform tax policy, treating all capital gains equally, regardless of the holding period or inflation adjustments. Cons: 1. Higher Tax Burden: - Inflation Impact: Without indexation, taxpayers may end up paying tax on gains that are purely due to inflation, effectively increasing the tax burden. - Reduced Real Returns: Investors' real returns (after accounting for inflation) may decrease, discouraging long-term investments. 2. Investment Discouragement: - Disincentive for Long-term Investment: May discourage long-term holding of assets, as investors might prefer short-term investments to avoid higher capital gains tax. - Market Volatility: Could lead to increased market volatility due to shorter investment horizons and more frequent trading. 3. Fairness Concerns: - Unfair to Long-term Investors: Long-term investors may find it unfair as they are penalized for holding assets longer, potentially leading to reduced overall market stability. 4. Impact on Certain Sectors: - Real Estate and Gold: Sectors like real estate and gold, where inflation plays a significant role in price appreciation, could be adversely affected, leading to a slowdown in these markets. 5. Investor Sentiment: - Negative Perception: May create negative sentiment among investors, affecting their confidence in the market and future investment decisions. Overall, while removing indexation might simplify the tax system and increase revenue, it could also impose a higher tax burden on taxpayers, discourage long-term investments, and impact investor sentiment negatively.

Well composed thoughts. Decision makers must ponder

Yesterday, I had the opportunity to engage with the Hon'ble Lieutenant Governor of Delhi, Vinai Kumar Saxena, alongside the President of CII, Mr Ramachandran Dinesh & other eminent CII leaders. Our discussions focused majorly on unlocking Delhi's immense potential for growth. Driven by ongoing infrastructure upgrades, surging demand, and evolving demographic preferences, Delhi is poised for an exciting transformation which presents significant opportunities for forward-thinking organizations. Investing in the city's all-round development, particularly by nurturing the start-up ecosystem and attracting leading organizations, will not only accelerate infrastructure advancement but also pave the way for a holistic real estate uplift. We, as stakeholders, have a shared responsibility to work collaboratively towards establishing Delhi as India's premier business destination. I look forward to interacting closely with all stakeholders to realize this exciting future for Delhi. #FutureReadyDelhi #MakeInIndia #growth #future #economy

Explain with so clarity