Income Tax News: Several key changes in the tax landscape, announced in the Union Budget 2024, will come into effect from October 1, 2024. These changes, passed through the Finance Bill, cover various aspects of income tax, securities transaction tax (STT), Aadhaar card regulations, and tax deducted at source (TDS) on government bonds and other income categories. Here’s a detailed look at the major revisions:
Significant Tax Changes to Take Effect from October 1, 2024
- Securities Transaction Tax (STT):
Starting October 1, the STT on Futures and Options (F&O) transactions has been increased to 0.02% and 0.1%, respectively. Additionally, income from share buybacks will now be taxed in the hands of beneficiaries, increasing the tax burden on investors. - Aadhaar Card Requirements:
To prevent misuse and duplication of PAN, the use of an Aadhaar Enrollment ID in place of an Aadhaar number, as well as in Income Tax Returns (ITRs) and PAN applications, will no longer be allowed from October 1. - Buyback of Shares:
As of October 1, share buybacks will attract shareholder-level taxes, akin to dividends. Investors will need to consider acquisition costs when calculating capital gains or losses, potentially leading to a higher tax liability. - TDS on Floating Rate Bonds:
A 10% TDS rate will be applied to specified central and state government bonds, including floating rate bonds, effective October 1. However, no TDS will be deducted if total annual earnings from these bonds fall below ₹10,000. - Revised TDS Rates:
TDS rates for various sections have been reduced from 5% to 2%, including payments under sections 194DA (life insurance policy payouts), 194H (commission or brokerage), and 194-IB (rent payments). E-commerce operators will also benefit from a TDS rate reduction from 1% to 0.1%. - Direct Tax Vivad Se Vishwas Scheme 2024:
The Direct Tax Vivad Se Vishwas Scheme 2024, designed to settle income tax disputes, will also come into effect on October 1. The scheme offers lower settlement amounts for new appellants and those who file declarations by December 31, 2024, compared to those filing after this date.
Aadhaar card regulations, and tax deducted at source (TDS) on government bonds
These changes aim to streamline the tax regime and reduce compliance burdens while also curbing tax evasion and improving revenue collections. Taxpayers are advised to take note of these upcoming revisions to ensure compliance.
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