Big Tax changes: Revised TDS rates, STT, Aadhaar Card Rules: Some important tax-related changes were made in the budget passed for the financial year 2024-25, which will come into effect from October 1, 2024. These include major changes like STT, TDS rates, Aadhaar card rules and Direct Tax Vivad Se Vishwas scheme. These changes will have a direct impact on taxpayers and investors, so it is important to understand them and prepare accordingly.
1. Securities Transaction Tax (STT)
Securities Transaction Tax (STT) has been increased in Budget 2024. Now STT has become 0.02% on futures and 0.1% on options. Moreover, the income received from share buyback will now be taxable in the hands of the beneficiaries. These changes will be effective from October 1, 2024.
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2. Change in Aadhaar card rules
To prevent misuse and duplication of PAN, Aadhaar enrollment ID will not be used in ITR and PAN applications from October 1. Now only valid Aadhaar number will be acceptable.
3. Tax on share buyback
Share buybacks will now be taxed at the shareholder level, just like dividends are taxed. This will increase the tax burden on investors and the cost of purchasing shares will be included in the calculation of capital gain or loss.
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4. TDS on Floating Rate Bonds
As per Budget 2024, 10% TDS will be deducted on central and state government bonds, including floating rate bonds. TDS will be deducted only if the annual income is more than Rs 10,000. TDS will not be levied on income less than this.
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5. Change in TDS rates
The TDS rates proposed in Budget 2024 have been approved in the Finance Bill. The major changes are as follows:
– TDS rate on payments under sections 19DA, 194H, 194-IB, and 194M has been reduced from 5% to 2%.
– TDS rate for e-commerce operators has been reduced from 1% to 0.1%.
Payments related to life insurance policy come under section 194DA.
– Under section 194G, commission is paid on the sale of lottery tickets.
– Commission or broker’s payments come under Section 194H.
Rent payment comes under section 194-IB.
– Section 194F is proposed to be abolished from 1 October 2024. This section deals with the payment made by the mutual fund or UTI for re-purchase of units.
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6. Direct Tax Dispute Se Vishwas Scheme 2024
The Central Board of Direct Taxes (CBDT) has announced the Vivad Se Vishwas Scheme 2024 (DTVSV, 2024) to settle the outstanding appeals related to income tax disputes. This scheme will be implemented from October 1, 2024.
