The latest amendments to the Union Budget 2024, as detailed in the Finance Bill (No.2) 2024, represent a significant shift toward greater transparency and compliance within our tax system. These changes introduce a more flexible tax structure for resident taxpayers while imposing stricter regulations on non-residents. This evolution in the tax structure aims to improve clarity and accountability, ensuring that all parties adhere to updated standards.

Here’s the comprehensive analysis in this document that offers a breakdown of these amendments, elucidating their impact on taxpayers and the broader tax environment.

Amendments passed by Parliament to Finance (No.2), Bill, 2024

Restoration of Indexation Benefit on Land or Building or both

  • The resident Individual and HUF taxpayers have now been given an option to compute long term capital gains under the new provisions (at the rate of 12.5% without indexation) and under the old provisions (at the rate of 20% with indexation) and the excess tax payable, if any, under the new provisions is waived. This is applicable for acquisition prior to 23rd July 2024 and sale on or after 23rd July 2024.
  • It is pertinent to note that this restoration is only with respect to Land or Building or both and only for resident Individuals and HUFs. It is not applicable to non-residents or firms, companies, AOPS, etc. Also, if under the old provisions there is loss after indexation then the same shall lapse.

Currency fluctuation on unlisted securities for non-residents

  • The original Finance (No.2) Bill, 2024 allowed benefit of currency fluctuation in computation of long term capital gains on unlisted securities or shares of a company not being the company in which public are substantially interested to the non-residents.
  • Through the amendment, the currency fluctuation will now not be available in computing long term capital gain on unlisted securities to non-residents.

Extension in the meaning of ‘Undisclosed Income’

  • The next amendment includes “exemption” claimed which is found to be incorrect to be ‘Undisclosed Income’ regarding block assessment under section 158B.
  • Earlier, the definition of ‘Undisclosed Income’ included money, bullion, jewellery, other valuable article, expenditure/income based on entry in books or other documents or transactions which has not or would not be disclosed for purposes of the Act or, any expense, deduction or allowance claimed which is found to be incorrect.

Liberal computation of ‘Undisclosed Income’

  • The Assessing Officer could compute ‘Undisclosed Income’ on the basis of evidence found as a result of search or requisition of books and other documents and ‘such’ other materials and information. The amendment has substituted the word ‘such’ with ‘any other’. This extends the scope of evidence that may be relied on while framing block assessment orders.