Taxpayers Can Choose Between Old and New LTCG Regime: FM Sitharaman
Finance Minister Nirmala Sitharaman announced in Parliament that taxpayers will now have the option to choose between the old and new long-term capital gains (LTCG) regimes. This move is part of the Union Budget for 2024-25, aimed at simplifying the tax system and ensuring equitable treatment of all asset classes.
"The new tax regime is simpler and offers more flexibility to the taxpayer. The old regime is still not dissolved, allowing individuals to choose between the two," said Sitharaman, referring to the amendment proposed.
The Finance Minister emphasized that the revised LTCG option on real estate aims to impose no additional tax burden on taxpayers. "The amendment gives taxpayers the choice to calculate and determine what works better for them. This ensures there will be no additional tax burden on the people," she added.
Under the current amendment, taxpayers with assets acquired before July 23 can compute tax under the old scheme with indexation or the new scheme and pay the lower tax. "Removal of indexation in LTCG on real estate was not done for revenue considerations but for simplification," Sitharaman explained.
Highlighting the benefits to the middle class, the Finance Minister noted that the effective tax on an annual income of Rs 15 lakh was reduced to 10 percent in 2023, and further reduced this year under the new income tax regime. She also mentioned that the 'Vivad se Vishwas' scheme helped resolve pending litigation and demands, benefiting the middle class and small businesses.
On the Customs side, the budget has taken steps to boost domestic production and enhance export competitiveness. Customs duty reductions are aimed at lowering the cost of raw materials, with rate cuts proposed for labor-intensive industries and exemptions and reductions on 27 critical minerals such as lithium and cobalt. Duty rate cuts for gold and silver have also been introduced.
Sitharaman pointed out that rate cuts on several inputs for the leather and textiles industries aim to boost employment and reduce costs. A comprehensive review of the rate structure is planned for the next six months.
The Finance Minister also highlighted the relief provided to startups with the angel tax amendment. "Angel tax was introduced in 2012, but the UPA government did not remove it. We have moved away from the days of tax terrorism," she said.
Reflecting on the success of the new tax regime, Sitharaman reported that as of July 31, 72.8 percent of the 5.2 crore taxpayers have moved to the new system. A record 7.28 crore income tax returns have been filed for 2024-25, a 7.5 percent increase from the previous fiscal year, with 58.57 lakh being first-time filers, indicating a widening tax base.
