NEW DELHI: A day after passing the expenditure budget for 2023-24 without debate, the Lok Sabha on Friday passed the Finance Bill, too, without any discussion amid Opposition uproar demanding a JPC probe into allegations against industrialist Gautam Adani.
The Finance Bill, which gives effect to the tax proposals in the Budget, was passed with 45 changes.
One of the key changes is the removal of the tax benefits on long-term investment in debt mutual funds (MFs with over 35 per cent allocation to debt securities). Now, gains from such funds, irrespective of the holding period, would be taxed at slab rates. Long-term capital gains from debt funds would cease to get indexation benefits.
“An arbitrage is being created right now where interest income from debt mutual funds is not distributed and converted into long-term capital gains of 20 per cent (with indexation). In some cases, it comes to less than 10 per cent due to indexation. Thus, many taxpayers are able to reduce their tax liability through this arbitrage. This is sought to be addressed,” the finance ministry said.
In another setback to the investors’ community, the amended Finance Bill has increased the securities transaction tax by 25 per cent on both options and futures trades. On a positive note, the Bill brought relief to taxpayers with income marginally higher than Rs 7 lakh with an amendment clarifying that they won’t be unfairly taxed.
There is no tax for income up to Rs 7 lakh under the new tax regime but tax kicks in the moment one breaches that threshold. In such cases, the net payable tax can’t be more than the amount by which Rs 7 lakh is overshot, says the amendment. In other words, if a person’s income is Rs 7,00,100, the tax can’t be above Rs 100.
Finance Minister Nirmala Sitharaman said she will set up a panel led by Finance Secretary TV Somanathan to look into the issue of pensions while maintaining fiscal prudence to protect common citizens.
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