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Lok Sabha Approves Finance Bill 2024 with 45 Key Amendments
In a significant move for the real estate sector, the Lok Sabha approved the Finance Bill 2024 on Wednesday, introducing relaxed capital gains tax provisions for land and buildings. Originally proposed by Finance Minister Nirmala Sitharaman in the 2024-25 Budget, the Bill offers taxpayers the choice between continuing under the old regime with indexation benefits or opting for a new lower tax rate.
Key Highlights
New Tax Rates:
The Finance Bill 2024 reduces the long-term capital gains (LTCG) tax on real estate from 20% to 12.5%, initially without the indexation benefit.
Amendment Introduced:
Addressing criticisms, Finance Minister Sitharaman introduced an amendment allowing taxpayers to choose between the new 12.5% rate without indexation and the old 20% rate with indexation for properties purchased before July 23, 2024.
Approval and Amendments:
The Bill, approved by a voice vote, includes 45 official amendments and now proceeds to the Rajya Sabha.
Impact on Taxpayers
Restoration of Indexation Benefit:
The amendment ensures that taxpayers who purchased properties before the specified date retain the indexation benefit, thus reducing their overall tax burden.
Middle-Class Benefits:
The Budget proposes raising the tax exemption limit on long-term capital gains (LTCG) for listed equities and bonds from Rs 1 lakh to Rs 1.25 lakh, offering relief to middle-class investors.
Economic and Policy Implications
Boosting Investment:
Finance Minister Sitharaman emphasized that the Budget aims to boost investment and consumption. Measures include reducing custom duties on various items to stimulate trade and generate employment.
GST on Insurance Premiums:
Addressing the issue of removing the 18% GST entirely from health and life insurance premiums, Sitharaman noted that these commodities were taxed by states prior to the GST rollout. The current GST rates cover these types.
The Finance Bill 2024 introduces significant amendments, particularly in the real estate sector, marking a major overhaul of India’s tax regime. The government’s responsiveness to feedback, as demonstrated by the amendments, indicates a balanced approach between revenue generation and investment incentives.
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