Lok Sabha passes Finance Bill, amends provision on LTCG tax

• Finance Bill 2024 was recently passed with an amendment relaxing the recently introduced new capital gains tax on real estate.

Highlights:

• This amendment allows taxpayers an option to switch to a new lower tax rate or stick to the old regime that had a higher rate with indexation benefit.
• The amendment comes after a proposal to remove indexation benefit in calculation of long-term capital gains on sale of immovable properties in the Budget 2024-25 had evoked criticism from various corners, including Opposition parties and tax professionals.
• The Budget had proposed a lower 12.5% rate of LTCG tax, down from 20%, while doing away with the indexation benefit.
• With this amendment, individuals or Hindu Undivided Families (HUFs) who bought houses before July 23, 2024, can opt to pay LTCG tax under the new scheme at the rate of 12.5% without indexation or claim the indexation benefit and pay 20% tax.
• The Finance Bill 2024 was passed by a voice vote in the Lok Sabha with a total of 45 official amendments.
• The Finance Minister said that simplification of the tax regime was the primary objective of the government , highlighting that 72% of those who had paid income tax had opted for the new regime while filing returns this year.
• Prior to levying 18% 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,” she said.
• Opposition MPs staged a walkout after a furore over the government not taking up an amendment in the Finance Bill to withdraw the 18% GST levy on medical and life insurance premiums.
• The Finance Minister said any amendment in GST had to be approved by the GST Council.

Prelims Takeaway

• GST council
• LTCG