Yielded to the voice of the people on real estate LTCG, says Finance Minister Sitharaman

Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman said that the government yielded to the voices of the taxpayers and hence have given them the option to choose among the new and old long term capital gains (LTCG) tax options on real estate assets bought before July 23, 2024.

“We have yielded to the voices. We have the courage of conviction to change. Amendments in the budget are brought in even later so that it is representative of common people's aspirations,” Sitharaman said in her reply to the discussion on the Finance Bill in Lok Sabha on August 7.

The government in the Finance Bill introduced an amendment that the LTCG on real estate assets acquired before July 23, 2024 can be computed under the old scheme with indexation or new scheme and pay the lower tax.

Sitharaman said that the discussions on capital gains have been twisted and turned and there was no revenue consideration behind the LTCG proposals, but only simplification.

“This LTCG option on real estate is aimed at no additional tax burden for taxpayers. The logic of the budgetary proposal on capital gains is that it has to be simplified and to treat all asset classes equally. Middle class has been in our mind,” she said.

Direct tax

The Finance Minister said that in assessment year 2024-25, there has been record filing of income tax returns returns at 7.28 crore till July 31, which is 7.5 percent higher as compared to 6.77 crore returns in previous assessment year.

Out of that in 2024-25 A.Y., 58.57 lakh income tax returns are from first time filers indicating widening of tax base, she said.

Indicating that the new tax regime is simpler and gives more flexibility to the taxpayer, Sitharaman said that 72.8 percent income tax returns have been filed under it this year.

“The old direct tax regime is still not dissolved. Individuals can choose between the two regimes. But till July 31 in 2024-25 AY, 72.8 percent i.e. 5.2 crore taxpayers have moved to the new tax regime. The total number of taxpayers is at 7.22 crore,” she said.

The Finance Minister said that the days of tax terrorism are over with faceless appeals and Vivaad se Vishwas was brought in to give relief to a large number of taxpayers.

The time taken for processing of income tax refunds as well has drastically come down in 2023-24 to 10 days as compared to 93 days in 2013-14, Sitharaman highlighted.

Middle class

The Finance Minister began her address by listing out all the measures that have been taken by the government for the middle class in reply to the Opposition’s claim that the Union Budget had nothing for them.

In the last two years, substantial relief has been given to the middle class. Exemption increase in LTCG to Rs 1.25 lakh is also aimed at providing relief to the middle class who have small investing capacity, she said.

Removal of angel tax in the Union Budget has come as a big relief for start ups. Angel tax was brought in 2012, but the UPA government did not remove the tax, Sitharaman added.

Defending the government’s position to not burden the middle class, she said that even during the COVID-19 pandemic, PM Narendra Modi’s direction was in total contrast to what was happening in developed countries.

“No tax on citizens to meet the COVID-19 expenditure was directed from the PM when developed countries were increasing their tax burden,” she said.