New Delhi, Aug. 18 -- Effective 23 July 2024, the government overhauled taxation of long-term capital gains (LTCG) on house property. Homeowners who sold property on or after this date faced little or no tax on the sale itself-but many still saw their total income rise, triggering higher surcharges and lost exemptions.

The reason: the switch to a 12.5% non-indexed LTCG tax, combined with a grandfathering rule that offered only limited relief for properties purchased before the cut-off date. The removal of indexation-the adjustment that previously allowed homeowners to factor in inflation and reduce net capital gains-creates hidden long-term implications for taxpayers.

While the grandfathering option may appear favourable, it comes with ...