Finance Minister Nirmala Sitharaman replies to the debate on the Finance Bill in the Lok Sabha on August 7, 2024. Photo: SansadTV via ANI

The Finance Bill 2024 was passed in the Lok Sabha on Wednesday (August 7, 2024) with an amendment relaxing the recently introduced new capital gains tax on real estate. It allows tax payers an option to switch to a new lower tax rate or stick to the old regime that had higher rate with indexation benefit.

The amendment comes after a proposal to remove indexation benefit in calculation of long-term capital gains on sale of immovable properties in the Budget 2024-25 had evoked criticism from various corners, including Opposition parties and tax professionals. The Budget had proposed a lower 12.5% rate of LTCG tax, down from 20%, while doing away with the indexation benefit.

With this amendment, individuals or Hindu Undivided Families (HUFs) who bought 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 Finance Bill 2024 was passed by a voice vote in the Lok Sabha with a total of 45 official amendments.

Replying to the debate before the passage of the Bill, Finance Minister Nirmala Sitharaman, rejected criticism from Opposition parties that the middle class was heavily taxed. She said that the Budget proposals were aimed at promoting investment and benefiting the middle class.

She said that the Narendra Modi government had brought in a simplified taxation regime and eased compliance without drastically increasing taxes.

Among the various measures taken to help the middle class, Ms. Sitharaman mentioned the reduction in customs duty on various goods that would promote trade and investment and generate employment. She also referred to the hike in tax exemption limit on long-term capital gains in listed equities and bonds to ₹1.25 lakh from ₹1 lakh, a move that she said would benefit those investing in the stock market.

The Finance Minister said that simplification of the tax regime was the primary objective of the Modi government , highlighting that 72% of those who had paid income tax had opted for the new regime while filing returns this year.

“We have made transformational changes in tax governance. In 2023, the tax slabs were significantly reduced. Again, this has been done this year,” Ms. Sitharaman said, adding that the standard deduction for the salaried class had been increased.

On the Opposition’s demand for removal of Goods and Services Tax on health and life insurance premiums, the Union Minister 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,” she said.

Opposition MPs staged a walkout after a furore over the government not taking up an amendment in the Finance Bill to withdraw the 18% GST levy on medical and life insurance premiums. The amendment had been moved by N.K. Premachandran of the Revolutionary Socialist Party.

The Finance Minister said any amendment in GST had to be approved by the GST Council.

Protesters scatter as Kenya police sprays water cannon at them during a protest over proposed tax hikes in a finance bill in downtown Nairobi, Kenya on June 25, 2024.
| Photo Credit: AP

The Indian High Commission in Kenya on June 25 advised Indian nationals to exercise “utmost caution” in view of prevailing “tense” situation arising out of violent protests in the African nation.

Kenya’s capital Nairobi and other cities across the country witnessed violent clashes and demonstrations after Kenyan Parliament passed a controversial bill that proposed to increase taxes.

“In view of the prevailing tense situation, all Indians in Kenya are advised to exercise utmost caution, restrict non-essential movement and avoid the areas affected by the protests and violence till the situation clears up,” the Indian High Commission said in an advisory.

The Indian mission also advised the Indian nationals to follow local news and Mission’s website and social media handles for updates.

This comes as the protests against proposed tax hikes in Kenya are the target of widespread protests, which are expected to culminate in a “total shutdown” of the nation. The people in the country have been organising rallies under the title of “7 Days of Rage” in response to the Finance Bill 2024, which has generated additional days of unrest around the country, reported CNN.

Around 20,000 Indians are currently living in Kenya, according to an official estimate.

Violent protests

Meanwhile, amid raging protests, Auma Obama, the half-sister of former U.S. President Barack Obama, was teargassed live on air on June 25, CNN reported.

The incident occurred when Auma Obama, who is a Kenyan-British activist, was in a chat with CNN‘s Larry Madowo with a group of teenage protestors. “I can’t even see anymore, we’re being teargassed,” she said. The demonstrations coincide with Kenya’s rising international profile following U.S. President Joe Biden’s designation of the country as a “major non-NATO ally” on Monday.

This is the first time a country in sub-Saharan Africa has been granted this designation. In May, as part of a major state visit to the White House honouring 60 years of diplomatic ties between the two countries, Mr. Biden declared his intention to promote Kenya to this status.