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).
Presently, under the Long Term Capital Gain (LTCG) arising to a non-resident taxpayer on transfer of unlisted shares and securities (specified assets) is taxable at a concessional rate of 10% (plus applicable surcharge and cess) without the benefit of indexation and foreign exchange fluctuation. The foreign exchange fluctuation benefit is generally available on sale of unlisted shares and certain categories of debentures of Indian companies.
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.
The Amended Bill provides that LTCG arising to non-resident taxpayers on transfer of specified assets shall be taxable as under:
- Where transfer takes place before 23 July 2024, 10% without benefit of indexation and foreign exchange fluctuation.
- Wheretransfertakesplaceonor after 23 July 2024, 12.5% without benefit of indexation and foreign exchange fluctuation – thereby withdrawing foreign exchange benefit as proposed in FB 2024.
Additionally, the Amended Bill also makes consequential amendments to TDS rates provisions.
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