FINANCE BILL (Syllabus: GS Paper 3 – Economy)

Context: The Lok Sabha passed the Finance Bill 2024, which includes an amendment easing the recently introduced capital gains tax on real estate.

Finance Bill 2024

• Purpose: It embodies the government’s proposals regarding taxation, spending, and other financial matters for the upcoming fiscal year.
• Categorization as a Money Bill: The Bill is categorized as a Money Bill under Article 110 of the Constitution, specifically dealing with taxation proposals.
• Legislative Context: According to Rule 219 of the Lok Sabha's Rules of Procedure, a Finance Bill is introduced annually to implement the Government of India's financial proposals for the fiscal year and any supplementary financial proposals.
• Constitutional Requirement: Article 110(a) of the Indian Constitution mandates that a finance bill be presented alongside the budget.

Key Features of Bill

• Election Impact: Focuses on maintaining the existing tax structure to provide stability during the April-May 2024 general elections.
• Targeted Tax Reliefs: Includes minor tax reliefs for specific sectors or taxpayers, aiming to incentivize behaviors or support vulnerable groups.
• Economic Growth Measures: Proposes infrastructure development, investment promotion, and business reforms to boost economic growth and job creation.
• Fiscal Deficit Reduction: Aims to reduce the fiscal deficit through measures to control spending or increase revenue, maintaining macroeconomic stability and investor confidence.

• Long-Term Capital Gains (LTCG): Gains made on assets held for a period exceeding three years (one year for shares and mutual funds).
• Long-term gains on all financial and non-financial assets will attract a tax rate of 12.5% instead of 10%.