What policy reversals happened under Modi 3.0?
The Modi government has made several policy changes since coming to power, especially with regard to financial policy. The most prominent reversal was that the government withdrew the proposal to remove the benefit from long-term capital gains (LTCG) tax on the sale of unlisted assets. This benefit helps keep inflation in check, and its removal led to public protest. Apart from this, the decision to reduce interest rates on provident fund deposits was also reversed. These reversals are important as they indicate a lack of policy certainty and are used by the opposition to highlight the government's weakness.
What was the controversy related to indexation benefits, and how did the government deal with it?
The 2024-25 budget had earlier proposed to remove indexation benefits for real estate and LTCG tax. This led to protests from home buyers and the real estate sector. The government later revised the policy, allowing homeowners to choose between a 20% LTCG tax with indexation benefits or the new 12.5% rate without indexation, but only for properties purchased before July 23, 2024. This reversal highlights the government’s response to public and industry concerns, but also the government’s weaknesses on taxation issues.
click and follow Indiaherald WhatsApp channel