India, March 11 -- A recent ruling by the Surat bench of the Income Tax Appellate Tribunal (ITAT) in the case of Adil Noshirvan Shethna vs ITO reaffirmed that when calculating long-term capital gains (LTCG) on inherited property, indexation of the cost must be applied from the year the original owner first acquired the asset, rather than the year it was inherited by the heir.

This interpretation has a direct impact on homeowners' tax liability, as it allows indexation to be calculated over the entire holding period of the property rather than only the years following inheritance. In practical terms, this could result in tax savings of around 30% to 37% compared with applying indexation only from the year the property was inherited.

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