India Inc favours phased transition to LTCG tax regime: Report

Indexation adjusts the purchase price of the asset for inflation, and, hence, reduces the taxable capital gains.

India Inc is requesting the government for a phased transition to the long-term capital gains (LTCG) tax regime announced in the FY25 Budget, The Economic Times has reported.

Some options put forward are a higher tax rate with indexation or a lower rate of 12.5 percent without indexation as well as some form of grandfathering for ancestral properties.

These suggestions were being examined at the finance ministry and would be discussed with the Prime Minister’s Office. A final call would be taken ahead of the reply to the Finance Bill in the Parliament, the report quoted sources as saying.

Moneycontrol couldn't verify the report independently.

Industry groups will send formal submissions to the finance ministry soon. “We are proposing that some time be given to taxpayers for transition,” an official with a leading industry lobby group told ET.

Finance Minister Nirmala Sitharaman announced the removal of the indexation benefits for the sale of property in the Union Budget and reduced the LTCG tax on such sales to 12.5 percent from 20 percent.

Also Read | 12.5% LTCG is low compared to global standards, says Finance Secretary Somanathan

The Budget for 2024-25 announced a 12.5 percent LTCG tax on all financial and non-financial assets. It proposes to reduce the LTCG on multiple asset classes including, gold, gold and silver Exchange-Traded Funds (ETFs), fund of funds (FOF), international funds, and unlisted securities.

Indexation adjusts the purchase price of the asset for inflation, and, hence, reduces the taxable capital gains.