Finance Minister Nirmala Sitharaman on Wednesday strongly defended her budget. The Finance Minister said that the budget has reduced the tax burden of the middle class and the relaxation in the capital gains tax provision on property transactions is a reflection of the government’s acceptance of the expectations of the common man. According to Bhasha news, while responding to the debate on the Finance Bill (No. 2), 2024 in the Lok Sabha, she said that with the increase of 50 percent in the standard deduction, the tax burden on the middle class has been reduced. The budget simplifies the tax system without increasing the rates.
Parliament is not a platform to decide GST rates
As opposition parties used her ally and Union minister Nitin Gadkari’s demand for reduction in GST on health insurance premiums to attack the government, Sitharaman said states used to levy taxes on premiums before a uniform GST came into being in 2017. She said Parliament is not the platform to decide GST rates and it will have to go to a council with two-thirds representation from states. After the reply, the lower house passed the bill with 45 amendments by voice vote. The main amendment was related to levying capital gains tax on real estate transactions.
Indexation benefits restored
Opposition MPs walked out of Lok Sabha after an amendment moved by RSP member N K Premachandran seeking withdrawal of 18 per cent GST on medical and life insurance premium was not taken up. The amendment in the Finance Bill relating to LTCG tax restored indexation benefit on sale of properties purchased before July 23, 2024. Now, individuals or HUFs buying homes before July 23, 2024 can choose to pay LTCG tax at the rate of 12.5 per cent without indexation under the new scheme or pay tax at 20 per cent by claiming indexation benefit.
Rollover benefit retained in case of new property purchase
Sitharaman had reduced the long-term capital gains (LTCG) tax on real estate from 20 per cent to 12.5 per cent without indexation benefit in her Budget for 2024-25. This was criticised, especially by the middle class, who felt that the LTCG tax liability had been increased. However, in her response, the minister said that there has been no increase in the tax burden even in hypothetical calculations and the benefit of rollover in case of new property purchase has been retained. The change in LTCG tax rate was not a revenue generating exercise or greed but an attempt to bring parity among similar asset classes. This change gives a fair choice and choice to the property holder. She said that to address the concerns, the option of indexation benefit has now been brought back for properties purchased before July 23, 2024.
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