Key Income Tax Changes in Budget 2024 Effective from October 1, 2024
Key Income Tax Changes in Budget 2024
Here are six key income tax changes introduced in the Union Budget 2024, set to take effect from October 1, 2024. These changes were passed as part of the Finance Bill and will impact various aspects of taxation, including STT, Aadhaar, TDS, and share buybacks.
1. Securities Transaction Tax (STT)
Starting October 1, 2024, the STT on Futures and options (F&O) transactions will increase to 0.02% and 0.1%, respectively. Additionally, income from share buybacks will now be taxed in the hands of shareholders.
2. Aadhaar Requirement
From October 1, 2024, Aadhaar Enrollment IDs will no longer be accepted in place of an Aadhaar number for PAN applications or while filing income tax returns. This move aims to reduce PAN misuse and duplication.
3. Buyback of Shares
The buyback of shares will now be taxed at the shareholder level, similar to dividends, which will result in investors facing a higher tax burden. Also, the cost of acquiring shares will be considered when calculating capital gains or losses.
4. TDS on Floating Rate Bonds
From October 1, 2024, TDS at a rate of 10% will be deducted from specified central and state government bonds, including floating rate bonds. However, no TDS will be deducted if the total income from these bonds is below ₹10,000 in a financial year.
5. TDS Rate Changes
The TDS rates for payments under sections 19DA, 194H, 194-IB, and 194M have been lowered from 5% to 2%. Additionally, the TDS rate for e-commerce operators has significantly reduced, dropping from 1% to 0.1%. These changes aim to ease the tax burden on businesses and individuals.
- Section 194DA – Payment in respect of life insurance policy
- Section 194G -Commission on sale of lottery tickets
- Section 194H – Payment of commission or brokerage
- Section 194-IB – Payment of Rent by certain individuals or HUF
- Section 194M – Payment of certain sums by certain individuals or HUFs
- Section 194F – Payment on account of repurchase of units by mutual funds or UTI is proposed to be omitted from October 1, 2024.
6. Direct Tax Vivad Se Vishwas Scheme 2024 (DTVSV)
The Direct Tax Vivad Se Vishwas Scheme, aimed at resolving income tax disputes, will come into effect on October 1, 2024. Taxpayers who file their settlement declarations by December 31, 2024, will benefit from lower settlement amounts compared to those filing after that. The scheme also offers additional benefits to newer appellants as compared to old appellants.
These changes, effective October 1, will significantly impact investors and taxpayers. Revision of existing rates and provisions will also streamline the tax process.
