Recently, Lok Sabha approved the Finance Bill 2024 by making significant amendments. The Finance (No. 2) Bill, 2024 was presented by the Union Finance Minister, Nirmala Sitharaman on 23 July 2024. While moving the Bill for approval by the Lok Sabha on 7 August 2024, the Finance Minister  introduced amendments to FB (No, 2) 2024 (Amended Bill).

Here are key amendments:

1.      Indexation Benefit Restored For Limited Purpose Of Computing Long Term Capital Gains Tax

In order to grant relief from such excess tax liability arising to resident Individual and HUF (specified taxpayers), the Amended Bill has proposed to restore the benefit of indexation while computing tax payable on long term capital gain arising on transfer of land or building or both acquired before 23 July 2024.

2.      No Benefit Of Foreign Exchange Fluctuation For Non-Resident Taxpayers On Sale Of Unlisted Shares And Securities

In order to rationalise and simplify the capital gain tax rate, Finance Bill (No. 2) 2024 restricted the applicability of above concessional tax rate only on transfers taking place before 23 July 2024. Resultantly, transfer of such specified assets by non-resident taxpayers on or after 23 July 2024 was subject to a new tax rate of 12.5%. But there was no specific restriction proposed on availing foreign exchange fluctuation benefit.

3.      Employer To Consider Entire Amount Of The TDS/TCS While Computing Taxes On Salary Income

The Finance Bill (No. 2) 2024 also placed a limit on the extent to which such credit could be considered requiring that the salary TDS cannot be lower than the amount which would have been withheld in absence of consideration of such other income, TDS and TCS. This appeared to be contrary to the object of the amendment to facilitate the employer to consider other TDS/TCS to reduce salary TDS and by ease compliance and cash flow issues for the employees.

4.      Ambiguity On Applicability Of Erstwhile Reassessment Procedure

The provisions as introduced vide Finance Bill (No. 2) 2024 were ambiguous on applicability of erstwhile reassessment regime in a case where search action was initiated prior to 1 September 2024 and proceedings under the erstwhile reassessment regime commenced on or after 1 September 2024.

5.      Scope Of UDI Extended To Include Incorrect Claim Of Exemption For Search Assessments

Under the block assessment as proposed vide FB (No. 2) 2024, tax authority is to compute UDI basis evidence found as a result of search, survey or requisition of books of account or other documents. In addition, the tax authority can also take into consideration ‘such’ other material or information as are available with the tax authority or which comes to tax authority’s notice during block assessment proceedings.