The Revenue Secretary of India, Sanjay Malhotra, defended the recent budget proposal to raise the long-term capital gains (LTCG) tax on listed equities and remove indexation benefits for real estate.
Increased Tax on Passive Income: Malhotra argues that a slightly higher LTCG tax on equity (from 10% to 12.5%) is justified compared to the higher tax rates on salary, business, and rental income.
Simplification for Real Estate: He views the removal of indexation benefits for real estate LTCG as a simplification measure, aligning it with other asset classes like stocks and fixed deposits.
Minimal Impact: Malhotra believes the tax increase is minor and will primarily affect high-income individuals. He claims the capital markets have already absorbed this change.
Background:
The Union Budget 2024-25 introduced a flat 12.5% LTCG tax on all financial and non-financial assets.
This raised the tax for listed equities (previously 10%) and lowered it for real estate (previously 20% with indexation). However, real estate now loses the inflation adjustment benefit.
Disclaimer: This content is for informational purposes only and does not constitute financial advice.