Finance Minister Nirmala Sitharaman on Wednesday said the controversial long-term capital gains (LTCG) tax proposal on real estate is being amended to give taxpayers the option to calculate tax liability at lower rates under the old system or without indexation and pay less tax on either. She said the ‘rollover’ benefit will be available to taxpayers who buy new real estate using capital gains on sale of old property. Responding to the discussion on the Finance Bill in the Lok Sabha, the Finance Minister also said that the opposition is creating a false atmosphere of the middle class being angry with the government over the budget and the government has simplified the taxation system without increasing taxes heavily and has taken many measures which have provided relief to the middle class. The proposal put forward in Budget 2024-25 to remove the indexation benefit in calculating long-term capital gains on sale of immovable properties has been sharply criticized by various parties, including opposition parties and tax professionals.
Now no additional tax burden will increase
The Finance Minister assured the House that no additional tax burden will be increased in respect of LTCG tax after the amendment. She said that in line with the vision of Prime Minister Narendra Modi, the government has created a simple and technology driven tax system, which aims to simplify taxation, reduce the burden on taxpayers and make it transparent. The Finance Minister said that tax proposals have been placed on this basis. She said, “Some (opposition) members have talked about the burden of tax on the middle class. An atmosphere is being created that the middle class is angry, nothing has been done for it.
There was once a tax of up to 98%
Sitharaman attacked the Congress and said, “During the governments that imposed emergency, the country had a tax rate of up to 98 percent. Then there was no concern for the middle class. This government has made revolutionary changes in the tax system in the last ten years.” She also said that the people of the country know how many corruption cases came up between 2004 and 2014 and “how much money went into the government treasury and how much went into the pockets of dynastic leaders.” Referring to the new tax system, she said that the effective tax on annual income of Rs 15 lakh was reduced to 10 percent in 2023 and it has been reduced further this year as well under the new income tax system.
Those with the new tax regime are also saving
She said that in this budget, the standard exemption for the salaried class has been increased from Rs 50,000 to Rs 75,000 and the effective relief can be Rs 17,500. Sitharaman said that after the Covid pandemic, most developed countries increased income tax, but “Prime Minister Modi had clearly instructed me not to impose any tax on citizens for Covid expenses. We have not increased tax at all in these years. The middle class has been given a big relief in the last two years.” She said, “I am confident that the middle class will definitely benefit from all such measures.” Referring to the ‘Vivaad se Vishwas’ scheme, the Finance Minister said that this has also provided relief to MSMEs, small companies and common people and this is also the middle class. She said that the removal of ‘Angel Tax’ for startups has provided a big relief. Targeting the Congress, the Finance Minister said that this tax was introduced in 2012 (in the UPA government) and the people who brought it were the ones who were demanding its removal by calling it an exploitative tax.
This time 58.57 lakh people filed ITR for the first time
Sitharaman said, “We worked towards removing it for two years and ended it in the budget this year.” She said that after filing income tax returns in 2013, its processing time was 93 days, which has been reduced to 10 days. Referring to the new tax system, Sitharaman said that out of 7.22 crore taxpayers who filed income tax returns till July 31 in the financial year 2024-25, 72 percent i.e. 5.25 crore have adopted the new tax system. She said, “This does not mean that those coming in the new tax system are not saving. They are also saving.” She also told the House that this time there were 58.57 lakh taxpayers who filed income tax returns for the first time. Sitharaman said, “This indicates that the tax base in the country is increasing.” The Finance Minister said, “Our tax proposals are going to bring investment, increase employment and lead to development.” Referring to the statements of some opposition members, she said that the notion of reducing corporate tax is wrong. The Finance Minister said that investment in mutual funds has increased and since 2019, an average of 17.88 lakh new portfolios are increasing every month and today there are about four crore mutual fund investors in the country.
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