Indexation rules for home loan interest to calculate capital gain

I intend to include the unclaimed interest on my home loan as part of the cost of acquisition for my property to calculate the capital gain. However, I am unsure whether I should factor in the indexed cost of the unclaimed interest, adjusted for inflation, or use the absolute cost without any adjustments.

- Gautam Nayak

Could you clarify which approach is correct for capital gains calculation?

-Name withheld on request

Various high court and tribunal decisions have favoured allowing unclaimed home loan interest to be included in the cost of acquisition when computing capital gains. Notably, with effect from 23 July 2024, indexation of the cost of acquisition is no longer available for computing capital gains income, but it is available as an alternative computation for determining the long-term capital gains tax liability on the sale of immovable property, providing some tax relief.