Every month there are some changes to the rules, so there will be some changes starting next month as well. Starting in October, some rules will change, most of which have to do with taxes. From October 1, six major changes will take place, from Aadhaar card to income tax. All these changes were announced by Finance Minister Nirmala Sitharaman in the 2024 Union Budget.
In the Union Budget 2024, Nirmala Sitharaman announced some changes regarding income tax. Some of these changes are effective now, while others will be effective from October 1st. These changes include Aadhaar card, STT, TDS rates, direct tax Vivad Se Vishwas scheme 2024.
1. Direct Tax Vivad Se Vishwas Scheme
The direct tax Vivad Se Vishwas scheme will come into effect from October 1, 2024. This program provides an opportunity to resolve outstanding tax disputes. It was initially launched in 2020 to resolve pending tax appeals. The Vivad Se Vishwas scheme involves resolving disputes by July 22, 2024. Under this provision, taxpayers who have disputes relating to tax, interest, penalties or charges may bring proceedings before the High Court or the Supreme Court.
The settlement amount under this scheme depends on the timing of payment. Taxpayers who elect to settle between October 1, 2024, and December 31, 2024 will have to pay the entire disputed tax amount or pay 25% of the disputed interest, penalties, or fees. However, individuals who wish to settle after December 31, 2024 will have to pay 110% or 30% of the disputed taxes in interest, penalties, or fees.
2. Adhakar
It is recommended that the provision allowing mention of Aadhaar enrollment ID instead of Aadhaar number be discontinued in the Union Budget 2024. The decision is aimed at eliminating misuse and duplication of PAN. From October 1, 2024, individuals will no longer be able to mention their Aadhaar registration ID in PAN allotment application forms and income tax returns.
As per the budget, Section 139AA of the Act requires eligible persons to quote Aadhaar number in PAN application form and income tax return with effect from July 1, 2017.
3. Securities Transaction Tax (STT)
Securities Transaction Tax (STT) applicable to futures and options (F&O) transactions will increase from October 1, 2024. In particular, the tax rates for stock futures and options (F&O) will increase by 0.02% and 0.1% respectively. Additionally, stock buyback proceeds will now be taxed based on the beneficiary’s taxable income. Additionally, the STT on option sales will increase from 0.0625% of the premium to 0.1%.
4. Floating TDS rates
Budget 2024 brings an important update on tax deducted at source (TDS), especially in relation to central and state government bonds, including floating rate bonds. This regulation will come into effect from October 1, 2024, when a 10% TDS will be applied to the bonds. Additionally, the new TDS regulation covers floating rate savings bonds. If the income received in a year is less than Rs 10,000, no TDS will be deducted. TDS is deducted only when the income exceeds the limit of Rs 10,000.
5. TDS rates
The TDS rates for payments under Sections 19DA, 194H, 194-IB and 194M have been reduced. The discount rate for these streams is now 2% instead of the previous 5%. In addition, the TDS rate for e-commerce operators has also been reduced from 1% to 0.1%.
- Section 194DA – Life insurance policy payments
- Section 194G – Commission on lottery sales
- Section 194H – Commission or brokerage
- Section 194-IB regarding payment of rent by Hindu Undivided Family (HUF)
- Section 194M concerning payment of certain amounts by designated persons or HUF
- The provisions of Section 194F regarding buy-back of mutual fund units or payments in connection with UTIs are expected to come into effect from October 1, 2024.
6. Share buyback
New rules on the taxation of stock buybacks will come into effect on October 1. Shareholders will now be responsible for tax on the buyback proceeds, which will apply to dividend taxation. This change will shift the tax burden from the company to shareholders, which will significantly impact buyback strategies.
