What’s in today’s article?

• Why in News?
• What is Capital Gain Tax?
• Indexation benefits
• Govt to restore indexation benefit for property

Why in News?

Following criticism over the Budget proposal to remove the indexation benefit on long-term capital gains (LTCG) from selling unlisted assets, the government has decided to offer taxpayers a choice.

For properties acquired before July 23, 2024, taxpayers can either pay LTCG tax at 20% with the indexation benefit or pay LTCG tax at the new rate of 12.5% without the indexation benefit.

This change comes from amendments made by the government in the Finance Bill.

What is Capital Gain Tax?

• About
  • A capital gains tax is a tax imposed on the sale of an asset. It is calculated as the difference between the sale price of the property and its purchase price.
  • Any gain or loss incurred from the sale of a house property may be subject to tax under the 'Capital Gains' head.
  • Similarly, capital gains or losses may arise from sale of different types of capital assets such as stocks, mutual funds, bonds and other investments.
• Types
  • Depending of the period an asset is held with the owner, there are two types of capital gains - Short-term Capital Gains and Long-term Capital Gains.
• Budget 2024 and Capital Gain Tax
  • For classifying assets into long-term and short-term, there will only be two holding periods: 12 months and 24 months.
• The 36-month holding period has been removed.
  • All listed securities with a holding period exceeding 12 months are considered Long-Term. The holding period for all other assets is 24 months.
  • The taxation of Short-Term Capital Gain for listed equity shares, a unit of an equity-oriented fund, and a unit of a business trust has been increased to 20% from 15%.
• Other financial and non-financial assets which are held for short term shall continue to attract the tax at slab rates.
  • The limit on the exemption of Long-Term Capital Gains on the transfer of equity shares or equity-oriented units or units of Business Trust has increased from Rs.1 Lakh to Rs.1.25 lakh per year.
• However, the rate at which it is taxed has increased from 10% to 12.5%.
  • The tax on long-term capital gains on other financial and non-financial assets is reduced from 20% to 12.5%.

Indexation benefits

• About
  • In case of property sale, indexation helps in adjusting its purchase price according to the prevailing inflation rate.
  • So basically, the adjustment inflates the purchase price of a property considering the inflation over the invested years.
  • This ultimately brings down the taxable capital gains on the sale of the property.
  • Through indexation, investors can accurately determine their capital gains and be assured that they are paying taxes only on the real gains after inflation is adjusted.
• Calculation
  • The government releases cost inflation index (CII) numbers to index capital gains on specified assets.
• CII number takes into account the prevailing inflation for the particular financial year.
  • Formula to calculate the adjusted purchase price using the cost inflation index is:
• Indexed cost = Purchase Amount * (CII in year of sale / CII in year of purchase).
• Initially, I-T department had set 1981 as the base year and later shifted it to 2001, with a base value of 100.
• Each year’s index is computed relative to this base.
  • This adjustment ensures that the taxable gain reflects the real increase in the asset’s value, not just the effect of inflation.
• Possible impact of removal of indexation benefit
  • Slowdown in the resale market
    • It may discourage owners of older residential properties and land from selling, as the increased tax liability reduces their potential profit.
  • Rise in cash transactions
    • There’s a concern that this change could incentivize under-the-table cash deals to avoid the higher tax burden, counteracting efforts to formalize the real estate sector.
  • Higher property prices
    • Sellers may attempt to offset the increased tax burden by raising property prices, effectively transferring the cost to buyers.

Govt to restore indexation benefit for property

• Background
  • The budget 2024 had announced the removal of the indexation benefits available on the property sale. It introduced a 12.5% LTCG tax rate without indexation.
  • The indexation benefit that was previously available on sale of long-term assets, has now been done away with.
  • So, any sale of long-term asset made after 23rd July, 2024, will attract tax rate of 12.5% only without indexation benefit.
• The indexation benefit, however, can be taken on the sale of property bought or inherited before 2001.
• Indexation benefits on property transactions to stay on
  • After backlash from different quarters, the Centre has decided to revisit its decision to scrap the indexation benefits on property transactions.
  • The government amended the Finance Bill, 2024, allowing people to choose between a 12.5% LTCG tax rate without indexation or a 20% rate with indexation for property acquired before July 23, 2024.
• Now a resident tax payer can opt for tax rate which is more beneficial for properties acquired prior to 23 July 2024.
• Initially, there was no grandfathering for properties bought after April 1, 2001.

Q.1. What is cost inflation index (CII)?

The Cost Inflation Index (CII) is a measure used in India to account for inflation in the computation of long-term capital gains tax. Published annually by the Central Board of Direct Taxes (CBDT), it adjusts the purchase price of assets to reflect inflation, thereby reducing the taxable capital gains.

Q.2. What is Central Board of Direct Taxes (CBDT)?

The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue under the Ministry of Finance in India. It is responsible for administering direct tax laws, including the Income Tax Act, and ensures tax compliance, policy formulation, and enforcement. The CBDT also advises the government on tax-related matters.

Source: After backlash, govt roll back: indexation benefits available on LTCG tax on sale of property | Financial Express | Live Mint

What’s in today’s article?

• Why in the News?
• About Ayushman Bharat Scheme
• About Ayushman Bharat Health and Wellness Centres (HWCs)
• Progress/Achievements under Ayushman Bharat Scheme
• News Summary

Why in the News?

• Beneficiaries aged 70 years and above made up over 12 per cent of all admissions under the government’s flagship Ayushman Bharat health insurance scheme, according to data presented in Parliament by the Union Ministry of Health and Family Welfare.

About Ayushman Bharat Scheme

• Ayushman Bharat, a flagship scheme of Government of India, was launched in 2018 as recommended by the National Health Policy 2017.
• Objective: To achieve the vision of Universal Health Coverage.
• This initiative has been designed to meet Sustainable Development Goal number 3 and its underlining commitment, which is to "leave no one behind."
• Ayushman Bharat adopts a continuum of care approach, comprising of two inter-related components, which are:
  • Pradhan Mantri Jan Arogya Yojana (PM-JAY)
• It provides health insurance cover of Rs. 5 lakhs per year to over 10 crore poor and vulnerable families for seeking secondary and tertiary care.
• Health and Wellness Centres (HWCs)

About Ayushman Bharat Health and Wellness Centres (HWCs)

• In February 2018, the Government of India announced the creation of 1,50,000 Health and Wellness Centres (HWCs) by transforming the existing Sub Centres and Primary Health Centres.
• The goal is to ensure access to quality healthcare closer to the community, thereby improving health outcomes and reducing out-of-pocket healthcare expenditures for individuals and families.
• These centres provide free essential medicines and diagnostic services, teleconsultation, and health promotion including wellness activities like Yoga.
• The HWCs also offer annual screening for those 30 years or older for Non Communicable Diseases such as:
  • Hypertension, Diabetes, and three of the most common Cancers in India — oral, breast and cervical.

Progress/Achievements under Ayushman Bharat Scheme

• The scheme crossed the milestone of 30 crore Ayushman cards in January2024.
• In order to reach out to the last mile, NHA has launched ‘Ayushman App’ for Ayushman Card creation.
• With 4.83 crore Ayushman Cards, Uttar Pradesh tops the list of States with the highest number of Ayushman Cards crated. Madhya Pradesh and Maharashtra stand at number two and three positions with 3.78 crore and 2.39 crore Ayushman cards respectively.
• 48% of treatment provided under the scheme has been availed by the female; thus, gender equity is part of core design of the scheme.
• Further, Ayushman Bharat has successfully catered to 6.2 crore hospital admissions worth more than Rs. 79,000 crores.

News Summary

• The Ayushman Bharat health insurance scheme data presented in Parliament reveals that beneficiaries aged 70 years and above constituted over 12% of all admissions and nearly 14% of the total expenditure till January 2024.
• Of the nearly 6.2 crore approved hospital admissions till January 2024, 57.5 lakh were for senior citizens aged 70 years and above, with treatment costs amounting to more than Rs 9,800 crore out of the total Rs 79,200 crore spent over the last six years.
  • The government's plan to expand Ayushman Bharat to include all individuals over 70, irrespective of economic status, is set to add nearly 4 crore new beneficiaries.
• Health economist Dr. Indranil Mukhopadhyay highlights that expanding coverage to older people of means will likely increase the policy's utilization and costs.
• The interim budget in February extended the scheme to ASHA and Anganwadi workers, but no further expansion was mentioned in the July budget, with a slight increase in allocation to Rs 7,300 crore.
• India's ageing population is projected to rise from 8.6% in 2011 to 19.5% by 2050, tripling in absolute numbers from 103 million in 2011 to 319 million in 2050.
• Hospital admissions for older individuals exceeded their population share in several states, with Maharashtra leading at 20.49%.
  • In contrast, Tamil Nadu recorded the lowest proportion of admissions (3.12%) but had higher treatment costs for the elderly.

States like Maharashtra, Kerala, Haryana, Himachal Pradesh, Bihar, and others had the highest proportions of spending on elderly care.

Q1. What is the goal of the National Health Policy?

The National Health Policy aims to achieve the following goals: It aims to offer superior health services to every age group and gender. The policy focuses on providing universal access to excellent quality health care services at a reasonable cost. Promoting health care orientation in every developmental policy.

Q2. What is National Health Authority?

The National Health Authority or the NHA, formed in 2019, is responsible for implementing India’s flagship public health insurance/assurance scheme Ayushman Bharat Pradhan Mantri Jan Arogya Yojana. NHA has been set-up to implement the PM-JAY at the national level.

Source: Govt spent 14% funds under Ayushman on those over 70 yrs: What does this mean for full cover to the elderly? | PIB

What’s in today’s article?

• Why in News?
• Life and health insurance market in India
• GST on health and life insurance premiums
• Rationale behind imposing the GST on health and life insurance premiums
• Need for withdrawing the GST on the premium

Why in News?

Insurance premiums for health and life policies have increased this year, and with an 18% Goods and Services Tax (GST) added, many people in India are finding insurance less affordable.

Opposition leaders protested at Parliament, demanding the removal of GST on these premiums. Recently, Union Minister Nitin Gadkari wrote to Finance Minister, arguing that GST on insurance premiums taxes life's uncertainties and hampers industry growth.

Life and health insurance market in India

• In fiscal 2023-24, the general insurance industry collected Rs 1,09,000 crore in health premiums, while life insurance companies collected Rs 3,77,960 crore, with LIC alone contributing Rs 2,22,522 crore.
• Five states—Maharashtra, Karnataka, Tamil Nadu, Gujarat, and Delhi—accounted for 64% of the total health insurance premium in 2022-23, with the rest of the states contributing 36%.
• A Swiss Re Sigma report noted a decrease in insurance penetration in India's life insurance sector from 3.2% in 2021-22 to 3% in 2022-23, while non-life insurance penetration remained at 1%.
• Overall, India's insurance penetration dropped to 4% in 2022-23 from 4.2% in the previous year.

GST on health and life insurance premiums

• GST, introduced on July 1, 2017, replaced all indirect taxes, including service tax and cess.
• Currently, GST on health and life insurance policies is fixed at 18%.
  • Prior to GST, life insurance premiums were subject to 15% service taxes, comprising Basic Service Tax, Swachh Bharat cess, and Krishi Kalyan cess.
• Since GST encapsulates service tax, which applies to the insurance industry, its introduction has resulted in an increase in premium amounts.
• This rise, combined with high medical inflation estimated at 14% last year, has made medical and term insurance less affordable for many.
• The government acknowledged in Parliament that it received requests for an exemption or reduction in GST rates on life and health insurance.

Rationale behind imposing the GST on health and life insurance premiums

• Role of GST Council
  • The GST rates and exemptions on services, including health insurance premiums, are set by the GST Council, which includes the Union Finance Minister and state/UT ministers.
• Revenue earning segment for the government
  • GST is applicable to all insurance policies since insurance is a service, and policyholders pay tax on their insurance premium.
  • This segment fetched Rs 21,256 crore in GST during the last three financial years, and another Rs 3,274 crore from the reissuance of health policies.
• Certain deductions allowed while computing income tax
  • Insurance premiums are eligible for tax deductions under Sections 80C and 80D of the Income Tax Act, 1961, with deductions up to Rs 1.5 lakh, including GST, and additional deductions for medical riders.

Need for withdrawing the GST on the premium

• Large increases in premium on health insurance policies
  • The main issue is the large increases in premium on health insurance policies this year — a leading public sector insurer has hiked the premium by 50%.
• GST on insurance in India is the highest in the world
  • Many experts have pointed out that the GST on insurance in India is the highest in the world.
  • This step might create challenges for IRDAI’s goal of “Insurance for All by 2047”.
• Report by Standing Committee on Finance
  • The Standing Committee on Finance in its 66th report, submitted to Parliament in February 2024, recommended rationalisation of the GST rate on insurance products, especially health and term insurance.
  • It said that the high rate of GST results in a high premium burden, which acts as a deterrent to getting insurance policies.

Q.1. What is Goods and Services Tax (GST)?

The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based tax levied on every value addition in India. It replaced multiple indirect taxes and is implemented to create a unified national market, simplifying taxation, and ensuring a seamless flow of input tax credits across the supply chain.

Q.2. What is Insurance Regulatory and Development Authority of India (IRDAI)?

The Insurance Regulatory and Development Authority of India (IRDAI) is the apex body overseeing the insurance industry in India. Established to protect policyholders' interests, promote fair practices, and ensure the orderly growth of the insurance sector, IRDAI regulates, licenses, and monitors insurance companies and intermediaries.

Source: Explained: The debate over GST on health insurance

What’s in today’s article?

• Why in News?
• About the Draft Broadcasting Services (Regulation) Bill 2024
• What is the Position of the OTT Platforms under the Latest Draft?
• Why is the Scope of the Draft Broadcasting Services (Regulation) Bill 2024 Significantly Expanded?
• Concerns Regarding the Draft Broadcasting Services (Regulation) Bill 2024

Why in News?

• The latest draft of the Broadcasting Services (Regulation) Bill 2024 seeks to replace the Cable Television Networks (Regulation) Act 1995.
• The draft Bill seeks to regulate the broadcast of news and current affairs programmes (excluding print news), as they will have to comply with the prescribed programme code and advertisement code.

About the Draft Broadcasting Services (Regulation) Bill 2024:

• Background: This draft is a revision of the one released by the Ministry of Information and Broadcasting in 2023 to consolidate the legal framework for the broadcasting sector and extend it to over-the-top (OTT) content and digital news.
• Key features:
  • Definition of digital news broadcasters:
    • The definition of digital news broadcasters to include publishers of news and current affairs content.
    • This means any person who broadcasts such programmes through an online paper, news portal, website, social media intermediary, etc., as part of a systematic business, professional or commercial activity.
    • However, this excludes replica e-papers.
  • Code of Ethics: The Bill seeks to validate the code of ethics prescribed under the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021, which has been stayed by the Bombay and the Madras HCs.
  • Content Evaluation Committee (CEC):
    • It is a committee to evaluate content and certify its compliance with the code.
    • The creator community will now be faced with a 3-tier regulation structure.
    • Creators will have to constitute CECs, register with a Self-Regulatory Organisation and adhere to orders by the Centre appointed Broadcast Advisory Council.
    • The news creators who do not intimate the Central government - names, credentials and other details of members of their CEC will be fined -
• Rs 50 lakh in the first contravention, and
• Rs 2.5 crore for subsequent violations in the next three years.

What is the Position of the OTT Platforms under the Latest Draft?

• Besides user generated content, the Centre also aims to regulate OTT platforms under this new bill.
• However, the revised draft no longer mentions the streaming platforms as a part of the definition of ‘internet broadcasting services’.
• The OTT platforms are now referred to as a ‘publisher of online curated content’ to bring them in line with IT Rules 2021.
• The content broadcast on these platforms is defined as the curations that exclude news and current affairs programs.

Why is the Scope of the Draft Broadcasting Services (Regulation) Bill 2024 Significantly Expanded?

• Instances of sensational news during the 2024 Lok Sabha polls:
  • Independent content creators made videos on current affairs which made some sensational claims about the government and its senior leaders.
  • Hence, the need was felt to create a system of accountability for these creators, and to provide a level-playing field between mainstream press and independent creators.
• Content amplification by big-tech companies:
  • Another concern was the decisions made by tech companies’ algorithms, and whether they ended up amplifying a certain narrative over another.
  • However, these companies have told the government that their algorithms serve users content depending on their browsing history.

Concerns Regarding the Draft Broadcasting Services (Regulation) Bill 2024:

• May have a chilling effect on the freedom of speech and expression:
  • The latest draft raises several questions on the freedom of speech and expression and the government’s powers to regulate it.
  • This includes defining a digital news broadcaster in sweeping terms; requiring prior registration with the government to prescribing standards for content evaluation; etc.
• The government may exempt a distinct class of players: This implies that some stakeholders may be spared from the Bill's provisions.

Q.1. What is cost inflation index (CII)?

The Cost Inflation Index (CII) is a measure used in India to account for inflation in the computation of long-term capital gains tax. Published annually by the Central Board of Direct Taxes (CBDT), it adjusts the purchase price of assets to reflect inflation, thereby reducing the taxable capital gains.

Q.2. What is Central Board of Direct Taxes (CBDT)?

The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue under the Ministry of Finance in India. It is responsible for administering direct tax laws, including the Income Tax Act, and ensures tax compliance, policy formulation, and enforcement. The CBDT also advises the government on tax-related matters.

Source: After backlash, govt roll back: indexation benefits available on LTCG tax on sale of property | Financial Express | Live Mint