How will removing indexation benefits affect capital gains taxation on property in Kerala? Is there enough undeclared cash available for tax evasion? It appears that salaried individuals may struggle to obtain property loans since the full value must be declared, while sellers might lean towards buyers using untaxed funds.
Eliminating indexation in Kerala’s real estate taxation increases the taxable capital gains since the property’s purchase cost is not adjusted for inflation. This means that even if your property has appreciated mainly due to inflation, the gains are fully taxed, which could lead to a higher tax bill. In my experience, this also affects long-held assets more significantly, leading to an environment where sellers may be forced to adjust pricing strategies. The change adds complexity in tax planning and can impact market behavior, as both buyers and sellers will have to reassess their financial arrangements.
dropping indexation removes the inflation cushion so more gains are taxable, which forces sellers to depend on solid cash. it squeezes buyers too as loans tighten. although some undeclared cash might still flow around, its use becomes riskier and less attractive imho.