Lok Sabha passes Finance Bill without discussion

Lok Sabha passes Finance Bill without discussion

What happened?

The Lok Sabha passed the Finance Bill, 2018, with 21 amendments, some of which had to do with the controversial long-term capital gains tax on equity and tax exemptions for start-ups.

LTCG amendments

Regarding the long-term capital gains (LTCG) tax, one of the major amendments made was that the grandfathering of gains till January 31, 2018 will now be incorporated in the computation of the gains itself, rather than for the purposes of computing tax at the rate of 10%.

No deferment

Markets were expecting some relief from the government like deferment of new capital gains tax or increase in the threshold limit from Rs. 1 lakh to Rs. 2 lakh for levy of capital gains tax at the rate of 10

Allowing indexation

The only noteworthy change is that of allowing the indexation benefit to shares which were unlisted as on January 31, 2018 but are listed on the date of transfer which happens to be on or after April 1, 2018

Tax deductions to startups: linking of turnover limit directly to year of claim

• Previously, start-ups were allowed 100% deduction of profits for any three out of seven years from the year of incorporation
• Restrictive condition:To avail of this incentive, the start-ups were required to comply with a condition that stipulated that their turnover could not exceed Rs. 25 crore in those seven years.
• Removed in the amendment: In an amendment to the Finance Bill as passed by the Lok Sabha, the condition is relaxed largely to the effect that turnover should not exceed the prescribed limit for the year for which 100% deduction is claimed by the start-up.