BJP-led government has significantly liberalised income tax rates and taken steps for the welfare of the middle class: Sitharaman in Lok Sabha

New Delhi (India), August 7 (ANI): Finance Minister Nirmala Sitharaman on Wednesday said the government has taken several steps to provide relief to the middle class, adding that personal income tax thresholds will be significantly liberalised in 2023.

Responding to the debate on the Finance Bill in the Lok Sabha, Sitharaman said the BJP-led government had once again reviewed the ceilings in the new tax settlement system in the Union Budget presented last month.

She noted that Prime Minister Narendra Modi’s government has not imposed additional tax burden during the COVID-19 pandemic to meet government expenditure. She added that the approach is to simplify taxation and reduce the burden on taxpayers.

Responding to Opposition members who have repeatedly accused the government of burdening taxpayers with direct and indirect taxes, she said the government has raised the standard deduction amount for salaried employees, increased the exemption limit for capital gains tax on certain listed financial assets and abolished the angel tax.

“The standard deduction amount for salaried employees has also been increased from Rs 50,000 to Rs 75,000 in the new regime in this fiscal. This is an effective relief of up to Rs 17,500 for a salaried employee,” she said. “The personal income tax brackets have been liberalised significantly for 2023. All taxpayers had a reduced tax liability of Rs 37,500. This government has once again revised the brackets in the new regime,” she added.

The minister said these steps would benefit the middle class.

In her Budget speech on July 23, Sitharaman had proposed to increase the limit of exemption from capital gains tax on certain specified financial assets from Rs 1 lakh to Rs 1.25 lakh per annum for the benefit of lower and middle-income classes.

Moving on to the issue of personal income tax rates, she had two announcements that will help those who decide to file tax returns under the new tax system.

Firstly, it is proposed to increase the standard deduction amount for salaried employees from Rs 50,000 to Rs 75,000. As a result of these changes, a salaried employee can save up to Rs 17,500 in income tax under the new tax regime. Similarly, it is proposed to increase the deduction amount for family pension for pensioners from Rs 15,000 to Rs 25,000.

This will bring relief to about four million salaried and retired workers, she said.

The Lok Sabha took up discussion on the Finance Bill after the House on Monday passed the Central Government Expenditure Bill for 2024-25.

The adoption of the Finance Bill by Parliament will conclude the budget process.

The Finance Minister has proposed an amendment to the Finance Bill aimed at providing significant relief from capital gains tax on real estate transactions.

The proposed amendment means that taxpayers on real estate transactions can avail either a lower tax rate of 12.5 per cent without indexation or a higher rate of 20 per cent with indexation if the property is acquired before July 23, 2024, the date of presentation of the Union Budget in the Lok Sabha. July 23, 2024, is now fixed as the cut-off date for computing capital gains as against the earlier cut-off date of 2001, which had raised a lot of concerns and sparked debate on its impact on long-time owners of real estate assets.

In a bid to strengthen India’s startup ecosystem, encourage entrepreneurial spirit and support innovation, Finance Minister Nirmala Sitharaman in her budget speech proposed abolishing the so-called ‘business angel tax’ for all types of investors.

This has been a long-standing industry suggestion, and this announcement is aimed at increasing investment in startups in particular. Startups act as engines of economic growth, playing a key role in generating new jobs, ideas, products, and services. As defined, angel tax refers to a tax levied by the government on funds raised by unlisted companies or startups if their valuation exceeds the fair market value of the company.

On July 23, Sitharaman presented the Budget 2024 bill in Parliament. It was her seventh consecutive budget, breaking the record of the late Moraji Desai, who presented six consecutive budgets.

The interim budget, presented on February 1, took into account the financial requirements for the interim period until the government is formed after the Lok Sabha elections.

The budget session of the Parliament began on July 22 and is scheduled to end on August 12. (ANI)