Income Tax Updates: Big changes related to Aadhaar, Securities Transaction Tax, share buybacks, and other schemes effective from October…
Income from share buybacks will be taxed.
(Representational image: www.freepik.com)
New Delhi: Finance Minister Nirmala Sitharaman announced some big changes in the Union Budget 2024. These changes will be effected in taxation policies and hence, several important changes will come into effect in income tax rules from October 1, 2024.
Some of the major changes will be related to the Aadhaar card, Securities Transaction Tax (STT), share buybacks, and Direct Tax Vivaad se Vishwas Scheme 2024, reports FE.
These major tax changes will come into effect from October 1, 2024
Securities Transaction Tax (STT) for futures and options (F&Os)
The Securities Transaction Tax (STT) for futures and options (F&O) has been increased by 0.02% and 0.1%, respectively.
Income from share buybacks will be taxed.
These changes will come into effect from October 1, 2024.
Aadhaar Enrolment ID not valid for PAN and ITR filing
The provisions to mention Aadhaar enrolment ID in place of Aadhaar number in ITR and PAN application will not be applicable from October 1. This is to prevent misuse and duplication of PAN.
TDS reduction on life insurance payouts
A TDS cut will provide relief to life insurance policyholders on their payouts from October 1, 2024. The current TDS rate on life insurance payouts is 5% which will be reduced to 2%. With this, policyholders will receive a bigger amount on maturity of their policies.
Share buybacks to be taxed at shareholder level
Starting October 1, share buybacks will be taxed at the shareholder level, like dividends. This will increase the tax burden of investors. Capital gains or losses will be calculated taking into account the purchase cost of these shares, as per FE.
Floating rate bonds TDS
The Budget 2024 has announced that tax at source (TDS) will be deducted at the rate of 10% on specified central and state government bonds, including floating rate bonds, from October 1, 2024. Tax will be deducted after the limit of Rs 10,000, i.e. if the income earned in a year is less than Rs 10,000, then TDS will not be deducted.
TDS rates:
The TDS rates proposed in the Union Budget 2024 have been approved in the Finance Bill:
- The TDS rate under sections 19DA, 194H, 194-IB and 194M has been reduced from 5% to 2%.
- TDS rate for e-commerce operators reduced from 1% to 0.1%.
- 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 HUFs
- Section 194M Payment of certain sums by certain individuals or HUFs
- Section 194F Payment in case of repurchase of units by a mutual fund or UTI is proposed to be deleted from 1st October 2024.
Direct Tax Vivaad se Vishwas Scheme 2024
The Central Board of Direct Taxes (CBDT) has announced the Direct Tax Vivaad se Vishwas Scheme, 2024 (DTVSV, 2024) to settle pending appeals in income tax disputes. The scheme will come into effect from October 1, 2024.
This scheme provides for a lower settlement amount for the 'new appellant' as compared to the 'old appellant'. Apart from this, there is also a provision for a lower settlement amount for taxpayers who make the declaration before 31 December 2024.
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