Taxation of buy-back proceeds treated as deemed dividend, with capital loss carry-forward to offset future gains.
Sums paid by a domestic company for purchase of its own shares are proposed to be treated as deemed dividend taxable in the hands of recipient shareholders at applicable rates with no expense deductions; concurrently, the extinguished shares will generate a capital loss (consideration deemed nil less cost of acquisition) which may be carried forward and set off against future capital gains on remaining or subsequently sold shares, preserving the shareholder's original cost of acquisition for later capital gains computation.

Securities Transaction Tax increase expands levy on options and futures, broadening the taxable derivative market from the Bill's commencement.
The Finance (No.2) Act, 2004 is amended to increase Securities Transaction Tax rates: the levy on sale of an option in securities is increased to a higher rate of the option premium and the levy on sale of a futures in securities is increased to a higher rate of the traded futures price. Recognised stock exchanges, specified funds, insurers and lead merchant bankers remain responsible for collecting STT and remitting it to the Central Government within the prescribed monthly timeline. The amendment responds to the growth of derivative trading and is set to commence on the Bill's stated future effective date.

Income from house property: rental receipts must be reported under that head, not as business income, tightening tax base.
Amendment clarifies that income from letting out a residential house or part thereof shall be chargeable under Income from House Property and not under Profits and Gains of Business or Profession, to prevent misclassification of rental receipts and tighten the tax base.

Gift transfers of capital assets now exempt only when made by individuals or Hindu undivided families, narrowing the prior exclusion.
The amendment restricts the exclusion from capital gains chargeability for transfers by gift, will or irrevocable trust so that it applies only where the transferor is an individual or a Hindu undivided family, thereby preventing use of gift transfers by companies to avoid capital gains tax and aligning the non-recognition rule with fair market value anti-avoidance provisions; the substitution applies prospectively to the announced assessment year and subsequent years.

TDS on partner payments introduced: firms must deduct on salary, remuneration, interest and commissions paid to partners.
A new provision imposes TDS on partnership firms for payments to partners - salary, remuneration, commission, bonus and interest - including amounts credited to capital accounts, where aggregate payments to a partner in a financial year exceed a specified threshold; the applicable rate is ten percent and the provision takes effect from the commencement of the stated financial year.

Tax collection at source on luxury goods expanded to cover notified high-value goods, enhancing tracking and widening the tax base.
Amendment expands the Tax Collection at Source provision that applies to high-value motor vehicle sales to include other notified high-value luxury goods; sellers must collect TCS from buyers on notified goods exceeding the prescribed value threshold at the rate specified by law, to enhance tracking of luxury expenditure and to widen and deepen the tax base, effective from 1 January 2025.

TDS on immovable property transfers: aggregate consideration across parties triggers deduction, curbing avoidance by splitting payments.
Amendment clarifies that for deduction under section 194-IA the consideration, and thus the threshold exemption and deduction obligation, is the aggregate amount paid or payable where more than one transferor or transferee is involved, countering treatment of individual buyer payments in isolation and addressing related tax avoidance.

Tax deduction at source on interest payments for floating rate savings bonds now applies, expanding the tax base and anti-avoidance.
Amendment to Section 193 mandates deduction of tax at source at the time of payment of interest to residents where interest exceeds the prescribed threshold, specifically covering Floating Rate Savings (Taxable) Bonds (FRSB) 2020 and any Central or State Government security as may be specified by the Central Government; the amendment is effective from 1 October 2024.

Non admissible business expenses: added back to life insurance profits, tightening deductions from assessment year 2025-26.
Amendment to Rule 2 of the First Schedule mandates that any expenditure not admissible under section 37 shall be included (added back) to the profits and gains of life insurance business, supplementing the actuarial surplus based computation and preventing misuse of deductions. The change takes effect from 1 April 2025 and applies from assessment year 2025 26.

Inclusion of foreign tax withheld amounts as deemed income to align income computation with foreign tax credit claims.
Proposed amendment deems amounts deducted under Chapter XVII-B and income tax paid outside India by way of deduction, where credit is allowed against tax payable under the Act, to be income received for computing an assessee's total income, preventing under reporting and double benefit from foreign tax credits.

Exclusion of professional fees from contractor TDS rules clarifies which payments require withholding under professional services provisions.
The amendment expressly excludes sums covered by section 194J from the definition of "work" in the Explanation to section 194C, removing overlap where payments for professional or technical services could otherwise be taxed as contractor payments; the change is framed as an anti avoidance clarification and takes effect from 1st October 2024.

Deductibility of settlement payments excluded, preventing business expense claims for amounts paid to settle contraventions under notified laws.
The amendment clarifies that expenditure incurred to settle proceedings relating to a contravention under any law, as notified by the Central Government, falls within the definition of expenditure "for any purpose which is an offence or which is prohibited by law" and therefore shall not be allowable as a deduction for business or profession.

Fair market value determination clarified for offer for sale shares listed after transfer, enabling computation of cost of acquisition.
Amendment extends the Explanation for computing fair market value to include equity shares sold under an offer for sale in an IPO that were unlisted on 31 January 2018 or at acquisition but listed subsequent to transfer; FMV is to be determined by applying the Cost Inflation Index proportion between 2017-18 and the first year of holding (or 2001-02 baseline) to the cost of acquisition, and the change is retrospective to 1 April 2018.

Vivad se Vishwas scheme proposed to settle direct tax disputes and reduce CIT(A) litigation backlog.
Introduction of a Direct Tax Vivad se Vishwas Scheme, 2024 to enable settlement of disputed direct tax issues pending at appellate levels, particularly at Commissioner of Income-tax (Appeals), to reduce litigation and expedite disposal. The proposal, prompted by the prior Direct Tax Vivaad Se Vishwas Act, 2020 and rising appeal pendency, will commence and conclude on dates to be notified by the Central Government and is set out in clauses 88 to 99 of the Finance (No.2) Bill, 2024.

Equalisation levy inapplicable to consideration for e commerce supply or services, reinstating exemption under section 10 and easing compliance.
The equalisation levy shall not apply to consideration received or receivable for e commerce supply or services on or after 1 August 2024. Income from e commerce supply or services made, provided or facilitated on or after 1 April 2020 but before 1 August 2024 shall be governed by clause (50) of section 10 of the Act, restoring its prior exemption framework where applicable. The exclusion for amounts effectively connected to a permanent establishment in India remains in force.

Penalty exemption threshold for undisclosed foreign assets increased, reducing penalty exposure for small value foreign holdings.
Amendments to sections 42 and 43 of the Black Money Act reinforce resident reporting obligations for foreign assets and income and confirm that failure to disclose may attract a penalty under section 42 or 43. The Finance Bill proposes raising the proviso exemption for low value assets (other than immovable property) so the sections will not apply where the aggregate value of such assets does not exceed a revised threshold, addressing stakeholder concerns that the prior threshold led to penalties disproportionate to asset value.

Prosecution exemption for TDS: specified deductors spared if quarterly TDS is paid by the filing deadline, new Finance Bill rule.
The amendment exempts a person from prosecution for failure to pay tax deducted at source where the tax for a quarter is paid to the credit of the Central Government on or before the time prescribed for filing the quarterly statement under the Act, thereby creating a temporal safe harbour tied to the statutory filing deadline.

Time limit for deeming assessee in default reduced to six years for deduction and collection; correction statement extends limitation.
Amendments to section 201 and insertion of sub section (7A) in section 206C impose a uniform limitation: no order deeming a person an assessee in default shall be made after six years from the end of the financial year in which payment/credit occurred or tax was collectible, or two years from the end of the financial year in which a correction statement is delivered, whichever is later; effective 1 April 2025.

Expanded TDS statement processing allows tax board to scheme for processing statements filed by non-deductors.
Amendment expands the scope of Section 200A to permit the Board to make a scheme for processing statements of tax deduction or correction statements filed by persons other than the deductor, addressing filings like exchange-submitted statements where the deductee provides tax details, with effect from the first day of April, 2025.

Lower deduction certificate extended to transactions under 194Q and 206C(1H) to reduce overlapping withholding and collection burdens.
The proposal amends subsection (1) of section 197 and subsection (9) of section 206C to include the buyer-side withholding provision and the seller-side collection provision within the scope of a lower deduction/collection certificate, allowing taxpayers to seek reduced withholding or collection rates to address blocked funds, refund processes, and overlapping compliance obligations.