Allow Indexation Benefits For Other Forms Of Savings: Congress
The government has introduced an amendment to the Finance Bill, 2024, allowing taxpayers to choose between a 12.5% long-term capital gains (LTCG) tax rate without indexation or a 20% rate with indexation for properties acquired before July 23. This amendment follows the Finance Minister’s announcement in the Union Budget 2024, where the tax on LTCG was reduced from 20% to 12.5%. However, the decision to eliminate the indexation benefit for real estate transactions involving properties bought on or after 2001 has raised concerns. Sellers are now required to pay taxes on the entire gain without adjusting for inflation, which has caused confusion and apprehension among property owners and investors.
The indexation benefit allowed property sellers to account for inflation when calculating capital gains, a process guided by the Cost Inflation Index published by the Central Board of Direct Taxes. The base value of this index was set at 100 on April 1, 2001. By eliminating this benefit, the government has altered the taxation landscape, particularly affecting those involved in real estate transactions.
Reacting to these developments, Congress leader Praveen Chakravarty highlighted the mixed reception of the Union Budget 2024. He noted that while the Congress party appreciated certain aspects of the budget, such as the adoption of ideas from the party’s manifesto, including the Employment Linked Incentive (ELI) scheme, the Apprenticeship Act, and the removal of the Angel Tax, they were strongly opposed to changes that negatively impacted the middle class and salaried professionals.
Chakravarty pointed out that the Leader of the Opposition, Rahul Gandhi, had openly criticised the budget in Parliament, labelling it as a betrayal of the middle class. Gandhi had said that the removal of indexation and the imposition of higher taxes on savings and investment gains were particularly harmful. He pledged to advocate for the middle class on these issues, stressing that the changes would adversely affect nearly 7 crore Indians who file income taxes, own or aspire to own homes, and invest their savings.
The Congress leader further elaborated that the removal of indexation and the increase in capital gains taxes had significantly raised the tax burden on salaried professionals. According to him, this comes at a time when the middle class is already under considerable pressure due to taxation policies under the Modi government. He claimed that, for the first time in India’s history, the total income taxes paid by middle-class individuals surpassed those paid by wealthy corporations.
Chakravarty also highlighted the widespread discontent that followed the budget announcement, noting that social media platforms and business events in cities like Mumbai witnessed spontaneous protests from professionals. In response, the All India Professionals’ Congress (AIPC) and the Congress Party launched a campaign with the hashtag #BringBackIndexation, accompanied by a petition that garnered nearly 12,000 signatures within a day of its launch.
Following the public outcry, the government announced a rollback, allowing individuals to continue benefiting from indexation on property gains by offering them an option. While welcoming this decision as a victory for the 7 crore taxpayers, Chakravarty stated that it was insufficient. He urged the government to extend indexation benefits to other forms of savings, including stocks, debt instruments, and fixed deposits.
Chakravarty concluded by stressing that this development is a testament to the power of the middle class and democracy. He remarked that when professionals unite and voice their concerns, their demands are heard, and this rollback serves as proof of the impact a strong opposition and a concerted effort can have in bringing about change. The AIPC, he added, will continue to champion issues that affect middle-class working professionals.
