The Lok Sabha on Wednesday passed the Finance Bill, 2024 along with official amendments which provided withdrawal of the indexation provision following demands that it would hurt the middle income classes.
Finance Minister Nirmala Sitharaman said the indexation provision was not brought for revenue considerations but for simplification of the system only. The government had yielded to public requests on the issue, she said.
Speaker Om Birla declared the Finance Bill passed by a voice-vote, after all non-official amendments were rejected.
The Minister said the government’s objective in the last 10 years was to bring transformational changes in the tax system, making it simplified and transparent, allowing ease of compliance. This year’s Budget proposals were also driven by this goal.
She said she brought amendments after meeting people round the country. Prime Minister Narendra Modi too wanted people’s views to be taken.
She said MPs had demanded withdrawal of the 18 per cent GST on life insurance and medical insurance. It was amazing how political parties were demanding it when it was prevalent in all States before the GST.
All those State laws and practices were subsumed in the GST, she said. The Minister said if the members wanted its withdrawal, they should ask Finance Ministers of their States to raise it in the GST Council.
Mrs Sitharaman said the matter was raised in the GST Council thrice in the 31st meeting, the 37th meeting and the 47th meeting. There were discussions also.
She said it was wrong that the Centre was “pocketing” over Rs 24,000 crore by this GST provision. Nine per cent of the GST receipts automatically went to the States and out of the remaining nine per cent which went to the Centre, 41 per cent was transferred to the States.
This meant that 74 per cent of this 18 per cent GST levy on insurance policies went to the States only. How could the members blame the Central government for this levy, she asked.
The Finance Minister said changes in the GST levies have to be first approved by the GST Council (in which the States have two-third majority) and then brought before Parliament.
Refuting charges that the middle income classes had suffered in the Budget, she said they had actually benefited from it. In 2023, the income tax slabs were liberalized and all tax payers had reduced their tax liability by Rs 37500.
This year’s Budget has done it again, she said. The slabs have been revised again. Standard reduction for the salaried classes has been increased from Rs 50,000 to Rs 75,000 in the new income tax regime.
This gives an effective relief of Rs 17,500 to the middle classes only. There is also deduction on family pension for pensioners which is proposed to be raised from Rs 15,000 to Rs 30,000. She said tax payers have a choice to go back or to continue in the old tax regime.
She said the government had closed all pending small tax demands benefiting lakhs of people. Faceless regime has reduced human interface, there is no discretion. Tax refunds’ period has reduced from 93 days to 10 days now.
The Finance Minister said relief on petrol and diesel excise duty was given by the government and the petrol price reduced by Rs 13 per litre and the diesel price by Rs 16 per litre.
In March, 2024 also petrol and diesel prices were reduced by Rs 2 across the country. The non-BJP State governments did only politics and did not pass on the benefit to the consumers. The relief was passed on to the consumers only by BJP-run States.
On the other hand, in Himachal Pradesh, the Congress government had raised the VAT. In Karnataka in June last, the petrol price went up by Rs 3 per litre. The State has Congress government, she said. The AAP government increased VAT by 10 per cent in Punjab. Both petrol and diesel prices went up.