Several significant changes to income tax regulations have come into effect as of October 1. As outlined in the Union Budget 2024, modifications have been made to the Aadhaar card, PAN card, Securities Transaction Tax (STT), TDS rates, and the Direct Tax Vivad Se Vishwas Scheme 2024. These proposed adjustments have now been implemented following the passage of the Finance Bill.
Here are the key financial changes that took effect on October 1, 2024:
1. Securities Transaction Tax (STT)
The 2024 budget has increased the STT on Futures and Options (F&O) of securities to 0.02% and 0.1%, respectively. Additionally, income derived from share buybacks will now be taxed at the beneficiary level, enhancing the tax burden on investors.
2. Aadhaar Usage
To combat PAN misuse and duplication, the provisions allowing the use of an Aadhaar Enrollment ID instead of an Aadhaar number, as well as the inclusion of Aadhaar details in Income Tax Returns (ITRs) and PAN applications, are no longer valid.
3. Share Buybacks
From October 1, share buybacks are now taxed at the shareholder level, similar to dividends. This change means that the acquisition cost of shares will be considered when calculating capital gains or losses, increasing the tax liability for investors.
4. TDS on Floating Rate Bonds
A 10% Tax Deducted at Source (TDS) will apply to certain central and state government bonds, including floating rate bonds, starting October 1, 2024. However, this TDS will only be applicable if the income exceeds Rs 10,000 in a year.
5. TDS Rates
The proposed changes to TDS rates from the Union Budget 2024 have been approved. The TDS for payments under sections 19DA, 194H, 194-IB, and 194M has been reduced from 5% to 2%. Additionally, the TDS rate for e-commerce operators has been lowered from 1% to 0.1%.
6. Direct Tax Vivad Se Vishwas Scheme 2024
The Central Board of Direct Taxes (CBDT) has officially launched the Direct Tax Vivad Se Vishwas Scheme 2024. This initiative aims to minimize income tax litigation by providing taxpayers the opportunity to resolve ongoing disputes, including appeals pending in the Supreme Court, high courts, and other appellate authorities as of July 22, 2024.