Why LTCG taxation is still confusing and how Budget 2026 could simplify it
Published by India Today
Abhishek Kumar's role: Quoted
Abhishek Kumar said the confusion centres on property, gold, debt funds and bonds, and that many clients are delaying sales for fear of a costly error. He pointed to common mistakes such as wrongly applying indexation, and called for one uniform LTCG framework.
What Abhishek Kumar said
Which investments cause the most confusion under the new capital gains rules?
Most of the confusion is about property, gold, bonds and debt mutual funds, because these were the assets where indexation used to give a clear and often large tax advantage over long holding periods. Mixed portfolios that hold property, debt funds and equity are harder still, since each part has its own definition of the holding period and its own special cases.
Is the 12.5% rate without indexation always better for property bought years ago?
Not necessarily. Many clients are holding off on selling property and gold as they worry about taking a step they cannot undo without knowing the tax cost. Someone who bought an apartment in the early 2000s often takes it for granted that the flat 12.5% rate will work out cheaper. Only after doing both calculations do they see that 20% with indexation can still mean a lower tax bill in their case.
What mistakes do people make when calculating long-term capital gains now?
Common errors I see include applying the Cost Inflation Index to assets that qualify only for the flat 12.5% rate, getting holding periods wrong, and assuming indexation still applies where it no longer does. People also miss exemptions or basic thresholds, or set off and carry forward capital losses in ways the law no longer allows.
What change would have made long-term capital gains tax simpler?
Ahead of Budget 2026, I said the change with the most impact would be a truly uniform framework for long-term capital gains: a single holding period, a single rate and a clearly written rule covering most financial assets. Without that, the old rules of thumb built on indexation no longer work in a simple way, and estimating post-tax outcomes and planning exits stays difficult.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on money management
The article explains why long-term capital gains tax remains confusing after Budget 2024 removed indexation for most assets and cut the rate to 12.5%. It covers the choice still available for older property, why real estate causes the most confusion, common calculation mistakes, and what investors hope Budget 2026 will simplify.
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Why LTCG taxation is still confusing and how Budget 2026 could simplify it