The central government's proposal of giving individuals the option to choose between two tax rates for long-term capital gains (LTCG) tax on properties is not enough and it should also allow indexation benefits for other forms of savings such as stocks and fixed deposits, the Congress said on Wednesday.
Praveen Chakravarty, chairman of Professionals' Congress, accused the Centre of "betraying" the middle and salaried class in the Budget 2024 through the removal of indexation and higher taxes on their savings and investment gains.
At a press conference at the AICC headquarters, Chakravarty said that the Congress strongly opposed what the finance did to the middle class and salaried professionals. Leader of the Opposition Rahul Gandhi in his response to the Budget in Parliament categorically said that this was a "betrayal of the middle class" through removal of indexation and higher taxes on their savings and investment gains, Chakravarty pointed out.
"He (Gandhi) had promised to fight for the middle class on this issue. This issue affected nearly 7 crore Indians who filed income taxes, owned or aspire to own a home and invest their savings. In this budget, effectively, through the removal of indexation and increase in capital gains taxes, the taxes of salaried professionals through investment gains went up dramatically," he said.
Chakravarty said the All India Professionals' Congress and the Congress Party launched a campaign to 'Bring Back Indexation' with a petition asking people to sign it. "We had nearly 12,000 people who signed the petition in just one day since its launch. Yesterday, the government of India announced a rollback of indexation of property gains by giving individuals the option to continue with indexation benefits. We welcome this. This is a victory to the 7 crore people that file income tax," he said.
"But this is not enough. We urge the government to allow indexation benefits for other forms of savings too such as stocks, debt, fixed deposits and so on," Chakravarty asserted. More importantly, this is a testament to middle-class power and the power of democracy, he said.
"When professionals come together and raise their voice it will be heard. This is also proof of what a strong Opposition and a concerted and united effort can achieve for the people of India. The AIPC will continue to raise issues that impact the middle-class working professionals," Chakravarty said.
On Tuesday, the Centre proposed significant relief for individuals who bought houses before July 23, 2024, by giving them the option to choose between two tax rates for long-term capital gains (LTCG) tax. The Budget 2024-25 had proposed to lower the LTCG from 20 per cent to 12.5 per cent but removed the indexation benefits. The new rates have come into effect from July 23, 2024.
The indexation benefit allowed the taxpayers to compute gains arising out of the sale of capital assets after adjusting for inflation. The tax experts had said that the proposed changes in the Budget would raise the LTCG tax burden. As per the amendments to Finance Bill, 2024, circulated to the Lok Sabha members on Tuesday, individuals or HuF who bought houses before July 23, 2024, can compute his/her taxes under the new scheme (@12.5 per cent without indexation) and old scheme (@20 per cent with indexation) and pay such tax which is lower of the two.
(With inputs from PTI)