Income Tax Rules: There will be some key changes in the income tax rules starting October 1. These changes will be related to Aadhaar card, Securities Transaction Tax (STT), share buybacks and Direct Tax Vivaad se Vishwas Scheme 2024.
Several important changes will come into effect in income tax rules from October 1. In the Union Budget 2024, Finance Minister Nirmala Sitharaman announced some major changes to be effected in taxation policies. Some of the key changes will be related to Aadhaar card, Securities Transaction Tax (STT), share buybacks and Direct Tax Vivaad se Vishwas Scheme 2024. The amendments have been passed in Parliament through the Finance Bill during the Budget session.
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.
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Aadhaar Enrolment ID not valid for PAN and ITR filing
To prevent misuse and duplication of PAN, the provisions allowing mention of Aadhaar enrolment ID in place of Aadhaar number in ITR and PAN application will not be applicable from October 1.
Reduction in TDS on life insurance payouts
Life insurance policyholders will be benefited from a TDS cut on their payouts from October 1, 2024. The TDS rate on life insurance payouts will be reduced to 2% from 5%, which means policyholders will receive a bigger corpus on maturity of their policies.
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Share buybacks to be taxed at shareholder level
From 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.
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.
Read More: Income Tax Department Hikes Threshold for Filing Appeals in Courts, Tribunal by Tax Officers
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 1st October 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.
