Praveen Chakravarty, president of the Professionals’ Congress, accused the government of “betraying” the middle class and the salaried class in the Union Budget.
Congress on Wednesday said the government’s proposal to give individuals a choice between two tax rates for long-term capital gains (LTCG) tax on real estate is not enough and it should also allow indexation benefits for other forms of savings such as stocks and fixed deposits.
Praveen Chakravarty, president of the Professionals’ Congress, accused the government of “betraying” the middle class and salaried class in the Union Budget by abolishing indexation and increasing taxes on their savings and investment gains.
“On July 23, Finance Minister Nirmala Sitharaman presented the government’s budget in Parliament. We welcomed certain aspects of it, but we strongly opposed many parts of the budget. We welcomed the fact that the finance minister adopted some of the ideas in the Congress party’s manifesto, such as the Employment Linked Incentive (ELI) scheme, the Apprenticeship Act and the abolition of the Angel Tax,” Chakravarty said at a press conference at the AICC headquarters here.
We strongly oppose, among other things, what the financial world did to the middle class and salaried professionals, he said.
Leader of the Opposition Rahul Gandhi, reacting to the budget in Parliament, categorically said it was a “betrayal of the middle class” by abolishing indexation and increasing 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 paid income tax, owned or wanted to own a house and invested their savings. In this budget, taxes of salary-paying professionals through investment gains have been drastically increased by removing indexation and increasing capital gains tax,” he said.
The middle class and salaried professionals are already paying the heaviest taxes under the Modi government as, for the first time in India, the total income tax paid by middle-class people is higher than that paid by rich corporations, Chakravarty said.
There were huge protests on social media and at business events in cities like Mumbai, where professionals spontaneously turned out to protest, he said.
Chakravarty said the All India Professionals’ Congress and the Congress party have launched a campaign to “bring back indexation”, with a petition asking people to sign it.
“We had nearly 12,000 people sign the petition in just one day since its launch. Yesterday, the Indian government announced a rollback of capital gains indexation by giving individuals the option to continue with indexation benefits. We are happy about this. This is a victory for the 7 crore people who file income taxes,” he said.
“But this is not enough. We urge the government to also allow indexation benefits for other forms of savings such as equities, debt, fixed deposits, etc,” Chakravarty claimed.
More importantly, this is a testament to the power of the middle class and the strength of democracy, he said.
“When professionals come together and raise their voices, they will be heard. This is also a testament to 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 affect middle-class working professionals,” Chakravarty said.
His comments come a day after the government proposed significant relief for individuals who bought a home before July 23, 2024, by giving them the option to choose from two tax rates for the long-term capital gains (LTCG) tax.
Budget 2024-25 had proposed to reduce the LTCG from 20 per cent to 12.5 per cent, but the indexation benefits were removed. The new rates are effective from 23 July 2024. The indexation benefit allowed taxpayers to calculate gains arising from the sale of capital goods after adjusting for inflation.
The tax experts had said that the proposed changes in the budget would increase the LTCG tax burden.
Under the amendments to the Finance Bill, 2024, circulated to the members of the Lok Sabha on Tuesday, individuals or HuF who purchased a house before July 23, 2024, can calculate their taxes under the new scheme (@12.5 per cent without indexation) and the old scheme (@20 per cent with indexation) and pay the lower of the two.
After the budget presentation, the Income Tax Department said that “significant tax savings” are expected for the vast majority of taxpayers due to a reduction in the long-term capital gains (LTCG) tax rate in the real estate sector.
Under the changes made in the 2024-2025 budget, the government will retain the indexation benefit for taxpayers on real estate purchased or inherited before 2001.
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First print: Aug 07, 2024 | 5:22 PM IST