 "Nirmala Sitharaman, Union Finance Minister in the Lok Sabha, replying to a discussion on the Finance Bill 2024")
Nirmala Sitharaman, Union Finance Minister in the Lok Sabha, replying to a discussion on the Finance Bill 2024
The new amendments to the Finance Bill 2024 would not impose any additional tax burden concerning the long-term capital gains (LTCG) tax on real estate sales, Union Finance Minister Nirmala Sitharaman told the Lok Sabha on Wednesday.
Replying to the House discussion on the Finance Bill, she said: “Every time we present the Budget…I have gone around the country to various destinations, met tax professionals, industry, traders, and all stakeholders, (have) taken their view and brought in amendments, so that the Budget will be represented to the common people aspirations.” The minister was responding to queries about a new amendment to the Bill that allows taxpayers to choose between a 12.5 per cent LTCG tax rate without indexation and a 20 per cent rate with indexation for property acquired before July 23, 2024.
On multiple amendments (45 in total) introduced soon after the Budget presentation, she remarked “…we heard the people who wanted something to change, and we have the courage and conviction” to bring that change.
The original LTCG tax proposal announced in the 2024-25 Budget, presented on July 23, had removed the indexation benefit, raising concerns over real estate transactions. Defending the move, she explained that it was removed to simplify the regime and not for revenue considerations.
Highlighting the proposed taxation announcements, the Union finance minister stressed: “Without drastically increasing taxes, we have brought in a simplified taxation regime and eased compliance.”
“The vision of Prime Minister (Narendra) Modi has been to establish a simple, efficient, and fair technology-driven taxation regime in this country. Simplification and ease of compliance for the taxpayer have been our primary objectives over the last 10 years, and this year, in PM Modi’s third term, the approach to taxation has been to simplify it, reduce the burden on taxpayers, and make sure it (taxation) is transparent and equitas (equitable),” she said.
The government’s approach this year is also aimed at further simplifying tax laws and procedures, fostering growth, and creating employment, Sitharaman stressed.
On direct taxes, the minister pointed out that the effective tax on an annual income of Rs 15 lakh was reduced to 10 per cent in 2023, and further reductions have been made this year under the new income-tax regime.
She noted that by December 31, 2023, only about 3.8 per cent of taxpayers opted for the new tax regime, equating to 3.09 million individuals from a total of 79.8 million ITR filing individuals. However, the number has increased significantly by July 2024.
Discussing tax returns, Sitharaman noted: “The average processing time of income tax returns has decreased from 93 days in 2013 to 10 days now.” She said that a record number of income tax returns had been filed by July 31, 2024, with approximately 58.57 per cent of returns coming from first-time income tax filers.
Further elaborating on the rationalisation of tax deducted at source (TDS) rates, she mentioned that the rate has been reduced from 5 per cent to 2 per cent, and Section 194F, which imposed a 20 per cent rate, has been eliminated. These changes are expected to improve cash flow for small businesses, providing them with better financial flexibility and supporting their growth, according to the minister.
In terms of search tax cases, the period of assessment has been reduced from 10 years to six years, with no reopening of taxes beyond that timeframe. Sitharaman said: “Assessments may be opened up to 5 years, but for the fourth and fifth years, only if unreported income exceeds Rs 5 lakh.”
On the indirect taxation front, she announced a comprehensive review of the rate structure to achieve a more simplified tax structure for the country as a whole.
For all Customs sites, “we have taken several steps to facilitate a simpler and faster process,” the minister said.
Addressing the issue of the 18 per cent goods and services tax (GST) on health insurance premiums, Sitharaman stated: “I want to raise two important points — tax on medical insurance existed even before the introduction of GST. There was already a pre-GST tax on medical insurance. This is not a new issue; it was already there in all states. Those protesting here… did they discuss the removal of this tax in their states?”
This response came following concerns raised by Opposition members, citing a letter from Road Transport & Highways Minister Nitin Gadkari to the finance minister, requesting the withdrawal of GST on premiums paid for life and medical insurance.
All clear
> The Finance Bill 2024 has been passed in the Lok Sabha and will now move to the Rajya Sabha
> The House has cleared 45 official amendments to the Bill, all passed by voice vote
> The amendments relax the newly proposed capital gains tax on real estate
> The definition of ‘undisclosed income’ under the block search provision has been expanded to include incorrect claims of exemptions
> An amendment to the Customs Act allows for the imposition of interest and penalties with regard to Customs duties and additional duties
First Published: Aug 07 2024 | 7:53 PM IST
