LTCG Tax and Indexation on Debt Mutual Funds Sold After July 23, 2024 - Unfair to Long-Term Investors?

Hi all,

I had some debt mutual funds purchased long before April 2023, which I continue to redeem after July 23, 2024. There is some confusion about whether indexation benefit is available in such cases.

Some articles mention a “grandfathering” rule, allowing continued use of indexation for assets bought before July 23, 2024 and sold after this date—taxpayers being allowed to choose between 20% tax with indexation or 12.5% without. But from what I understand, this grandfathering mainly applies to immovable assets like land and buildings, not to debt mutual funds.

For debt mutual funds, it appears that any units sold after July 23, 2024, are taxed at a flat 12.5% LTCG rate without any indexation, regardless of purchase date. Only redemptions before this cut-off can avail the 20% with indexation.

This seems highly unfair to long-term investors who held debt funds for many years, expecting to benefit from indexation. The lack of grandfathering for such cases means the intended tax planning over a decade is now completely circumvented in a retrospective fashion.

Is there any recourse or representation available to affected taxpayers? Has anyone seen discussions about possible relief, court challenges, or ongoing representations to the CBDT/Finance Ministry regarding this sudden change?

Appreciate references to exact notifications or any expert/legal opinions on this as well. Thanks!