Lok Sabha Passes Finance Bill 2024 With 45 Amendments

The Lok Sabha passed the Finance Bill, 2024 on Wednesday, following the government's decision to amend the recently introduced capital gains tax on real estate. This amendment allows taxpayers to choose between the new lower tax rate or retain the previous regime, which offered a higher rate with indexation benefits.

Finance Minister Nirmala Sitharaman had initially proposed in the 2024-25 Budget to reduce the long-term capital gains tax on real estate to 12.5% from 20%, but without indexation benefits.

To address concerns, she moved an amendment to the bill, providing taxpayers with the option to either accept the new tax rate or continue with the old system, which adjusts the property's cost price for inflation.

The amendment came after the new provision was criticised for raising tax incidence and disincentivising investments in real estate.

The major amendment in the bill relates to restoration of indexation benefit on sale of properties bought prior to July 23, 2024. Now, individuals or HUFs who purchased 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 Lower House later approved the bill with 45 official amendments by voice vote.

The Finance Bill 2024 will now go to the Rajya Sabha for discussion but the Upper House does not have powers, as per the Constitution, to reject a money bill. It only can return such bills and if they don't do so within the stipulated 14 days, the legislation is considered as approved.

Responding to demands for the removal of GST on health and life insurance premiums, Sitharaman said that 75% of the GST collected goes to states.

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, Sitharaman said.

(With inputs from PTI)