Key amendments to Finance (No.2) Bill 2024 at the enactment stage

The Finance (No. 2) Bill, 2024 [FB (No. 2) 2024 or Bill] was presented by the Hon’ble Finance Minister (FM) Nirmala Sitharaman on 23 July 2024[1] . While moving the Bill for approval by the Lok Sabha[2]  on 7 August 2024 , the FM introduced amendments to FB (No, 2) 2024 (Amended Bill). The amendments are generally intended to address certain ambiguities/uncertainties arising from the proposals as contained in the Bill.

Key takeaways

• Indexation benefit restored for the limited purpose of computing long term capital gains tax liability on sale of immovable property acquired before 23 July 2024 by resident individual or Hindu Undivided Family (HUF).
• Benefit of foreign exchange fluctuation for non-resident taxpayers on sale of unlisted shares and securities   withdrawn to maintain status quo with pre-amendment position.
• Modification in tax deduction at source (TDS) on salary income (Salary TDS) provisions to remove ambiguity in employer allowing complete credit of TDS/ tax collected at source (TCS) to employee while computing amount of tax on salary income to be deducted at source. 
  
• Ambiguity on applicability of erstwhile reassessment procedure for cases where search was undertaken prior to 1 September 2024 but reassessment proceedings are commenced on or after 1 September 2024 addressed.
  
• In the course of block assessments pursuant to search proceedings as introduced vide FB (No. 2) 2024, undisclosed income (UDI) can now be determined on the basis of any material or information available with/ coming to the notice of the tax authority during block assessment proceedings.
  
• Similar to incorrect claims of expenses, allowances and deductions, even incorrect claim of exemption will qualify as UDI to be subject to tax of 60% (plus applicable surcharge[3]  and cess) in block assessment cases pursuant to search proceedings as introduced vide FB (No. 2) 2024.
  

[1]  Refer our consolidated tax and policy alerts on tax and policy amendments on Budget 2024 released on 24 July 2024
[2] The lower house of parliament
[3] Presently, no surcharge is proposed to be levied and may be levied in future vide any Central Act