Several significant changes to income taxes will come into effect in India on October 1, 2024. These changes, outlined in the Union Budget 2024 and subsequently passed in the Finance Bill, aim to streamline tax procedures and increase tax revenue.
Here are some of the key financial changes that taxpayers should be aware of:
- Securities Transaction Tax (STT): The STT on Futures and Options (F&O) of securities has been increased to 0.02% and 0.1%, respectively. Additionally, income received from share buybacks will now be taxed at the beneficiary level. 1
- Aadhaar Card and PAN Card: Starting October 1, the use of an Aadhaar Enrollment ID in place of an Aadhaar number, as well as Aadhaar details in ITRs and PAN applications, will no longer be allowed. This measure is aimed at preventing PAN misuse and duplication.
- Tax on Share Buybacks: Share buybacks will now be taxed at the shareholder level, similar to dividends. This means that investors will have to factor in the acquisition cost of shares when calculating capital gains or losses.
- TDS on Floating Rate Bonds: A 10% tax deducted at source (TDS) will apply to specific central and state government bonds, including floating rate bonds, starting October 1. However, TDS will only apply if the income exceeds ₹10,000 in a year.
- Reduced TDS Rates: The TDS rate for payments under sections 19DA, 194H, 194-IB, and 194M has been reduced from 5% to 2%. The TDS rate for e-commerce operators has also been cut from 1% to 0.1%.
- Direct Tax Vivad Se Vishwas Scheme 2024: This scheme, which aims to reduce income tax litigation, will come into effect on October 1. Taxpayers can resolve ongoing disputes, including appeals pending in the Supreme Court, high courts, and other appellate authorities as of July 22, 2024.
These changes are expected to have a significant impact on the Indian economy and taxpayers. Individuals and businesses need to be aware of these changes and ensure compliance with the new regulations.
