The amendment implies that taxpayers can avail either a lower tax of 12.5 per cent without indexation or a rate of 20 per cent with indexation, if the property is acquired prior to July 23, 2024, the day union budget was presented in the Lok Sabha…reports Asian Lite News
The Finance Bill 2024 was passed by Lok Sabha on Wednesday evening with a few amendments moved by the government.
Replying to the debate, Finance Minister Nirmala Sitharman said the approach of the government has been to bring greater simplification of tax laws and procedures and enable growth and employment in the country. She responded to points made by members.
The Finance Minister clarified that in real estate, the roll over provisions have not been withdrawn and are applicable.
She said if the capital gain in a property transaction is invested in buying another one or two properties up to a maximum value of Rs 10 crore, no capital gain tax is required to be paid on such profits.
Capital gains can also still be invested in bonds which are notified under Section 54 of the Income Tax Act up to a maximum of Rs 50 lakh annually and save on taxes.
To give relief on budget proposals, Sitharaman also moved an amendment in the Finance Bill on the changes in the capital gains tax on property transactions.
The amendment implies that taxpayers can avail either a lower tax of 12.5 per cent without indexation or a rate of 20 per cent with indexation, if the property is acquired prior to July 23, 2024, the day union budget was presented in the Lok Sabha.
Sitharaman clarified that taxpayers can compute taxes under both provisions and choose to pay tax under the scheme where lower tax is applied.
Effectively, July 23, 2024, is now set as the cut-off date for the calculation of the capital gains versus the earlier cut-off of 2001.
Sitharaman said she has proposed these amendments as some members have raised hypothetical calculation to prove that under new provisions taxpayers will have to pay higher taxes.
The new tax proposals on capital gains tax was brought in to bring in parity among different asset classes like equities, mutual funds and real estate.
In the Finance Bill introduced on July 23, the Finance Minister had proposed a flat long term capital gains tax of 12.5 per cent with no indexation benefits, prior to it property transactions used to be taxed at 20 per cent with indexation benefit.
The minister also clarified that the grandfathering proposal will be allowed only for individual and Hindu Undivided Family (HUF) taxpayers and not for companies and Non Resident Individuals. They have to pay flat 12.5 per cent LTCG tax without indexation.
The proposed amendment will apply not only on real estate transactions but also on unlisted equity transactions, which are done before July 23, 2024. All such transactions will be taxed at 10 per cent long term capital gains instead of FY24-25 budget provision of 12.5 per cent tax.
With the opposition members demanding removal of GST on health insurance, Sitharaman said tax was there on medical insurance even before GST was introduced.
“There was already a Service Tax on medical insurance, before the GST was introduced. This is not a new tax, it was already there in all the states. Those protesting here, did they discuss regarding the removal of this tax in their states? Did they write to the Finance Ministers of their respective states about it and asked them to raise it in the GST Council where states have 2/3rd part? No, but they are protesting here. This is their double standards, this is their drama,” she said.
“Wrongful protests have happened recently, and comments have been passed on the basis of a news report which suggested that the ‘Centre has pocketed Rs. 24,529 crores of health insurance premiums alone’. This is incorrect and highly misleading. The GST rate of 18% on Health Insurance comprises of 9% CGST and 9% SGST. Thus, of the total collections of Rs 24,529 crores from Health Insurance in the last 3 years, Half of it, Rs. 12,264 crores, went straight to the states as SGST. It doesn’t even come to the Centre,” she added.