How to adjust your financial life after LTCG tax hike to 12.5%?

livemint.com:

MUMBAI: The topic of 'increased 12.5% LTCG tax on equities' needs no introduction now. Most equity investors have already registered their anger, in one form or another, on different social media and forums. In fact, the initial pain has now paved the way for what we Indians do best—adjustment.

While still upset, we have adjusted. While we would love to go back to the pre-2018 days of 0% tax or at least remain in the 2018-24 era of 10% tax, there is not much we can do. We equity investors (both in mutual funds and stocks) must now shell out more tax on our long-term gains. But will this remain at 12.5%? We don’t know, to be honest.

But if we look at the trajectory, over the last 6+ years, the LTCG (long-term capital gains) tax on equity has increased from 0% to 10% to 12.5%. So, it won’t be a surprise if it again sees an up move after a few years to bring it closer to middle-tax slabs. This is just speculation or a wild guess. But no doubt, as of now, the trajectory is upward-sloping.

So, if the future holds more taxes(!) for us, what should we equity investors do?

We rely on equity’s potential to generate inflation-beating post-tax returns. But with higher taxes to be paid on gains from equity going forward, what will be its impact and what can we do?

Many small investors (me included) have been diligently doing monthly SIPs for their financial goals like retirement (or early retirement), children’s education, marriage, vacation, future house purchases, etc. Naturally, with the tax hike, there is now a mathematical need to save a little more to account for higher tax outgo at the time of redemption in the future to fund the goals. This will be more obvious to those investors who invest in a goal-based manner as per the