New Delhi: The Lok Sabha Wednesday passed the Finance Bill 2024 after the government relaxed the just-introduced new capital gains tax on real estate, allowing taxpayers an option to switch to a new lower tax rate or stay with the old regime that had higher rate with indexation benefit.
Finance Minister Nirmala Sitharaman, who in her Budget for 2024-25 proposed to lower the long-term capital gains tax on real estate to 12.5 per cent from 20 per cent but without the indexation benefit, moved an amendment to the bill to give the option. Indexation benefit allows taxpayers to arrive at the cost price of the property after adjusting for inflation.
The amendment came after the new provision was criticised for raising tax incidence and disincentivizing investments in the real estate.
The major amendment in the Bill relates to restoration of indexation benefit on sale of properties bought prior to July 23, 2024. Now, individuals or HuFs who purchased houses before July 23, 2024, can opt to pay LTCG tax under the new scheme at the rate of 12.5 per cent without indexation or claim the indexation benefit and pay 20 per cent tax.
The Lower House later approved the bill with 45 official amendments by voice vote.
The Finance Bill 2024 will now go to the Rajya Sabha for discussion but the Upper House does not have powers, as per the Constitution, to reject a money bill. It only can return such bills and if they don’t do so within the stipulated 14 days, the legislation is considered as approved.
Sitharaman also said that the FY25 Budget proposals were aimed at promoting investment and benefiting the middle class.
She said that the hike in tax exemption limit on long-term capital gains in listed equities and bonds to Rs 1.25 lakh from Rs 1 lakh will benefit the middle class investing in stock markets.
The Modi government, she said, has brought in a simplified taxation regime and eased compliance without drastically increasing taxes. The reduction in customs duty on various goods will promote trade and investment and generate employment, she added.
Responding to demands for the removal of GST on health and life insurance premiums, Sitharaman said that 75 per cent of the GST collected goes to states.
Prior to levying 18 per cent GST on health insurance (premium), all states used to levy tax on insurance premiums. So when GST was rolled out, the tax automatically got subsumed into GST, Sitharaman said.
PTI
