Attention all income taxpayers: Starting October 1, several income tax changes will occur. These changes include requirements for the Aadhaar card, changes to Securities Transaction Tax (STT) and Tax Deduction at Source (TDS) rates.
The Direct Tax Vivad Se Vishwas Scheme was introduced, as proposed in the Union Budget 2024 and later approved in the Finance Bill. Let’s take a detailed look at these upcoming tax changes.
Aadhaar: To prevent the misuse of PAN and fake PAN cards, the government has mandated the provision of Aadhaar numbers when filing Income Tax Returns (ITR) after October 1 and when applying for a new PAN card.
Previously, providing the Aadhaar Enrollment ID was sufficient if the Aadhaar number was unavailable. However, this is no longer acceptable.
Shares Buy-back: Income from the buy-back of shares will be taxed from October 1, similar to dividends. However, these taxes will be based on the shareholders’ level.
Starting October 1, investors will pay higher taxes. Additionally, the cost of acquiring shares will be considered when calculating capital gains or losses.
Direct Tax Vivad Se Vishwas Scheme 2024: The Central Board of Direct Taxes (CBDT) has introduced a new scheme to resolve income tax disputes. This scheme will be effective from October 1.
This new scheme can resolve tax disputes with a much lower settlement amount than before. Furthermore, taxpayers must pay a significantly lower settlement amount before December 31, 2024. Failure to file the ITR within this deadline will result in a higher settlement amount.
Floating Rate Bonds TDS: As announced in Budget 2024, a tax deduction at source (TDS) of 10% will be imposed on certain central and state government bonds, including floating rate bonds, from October 1. However, no TDS will be applicable if the total annual income is less than Rs.10,000.
TDS Rates: The proposed TDS rates in the Union Budget 2024 have been approved in the Finance Bill. Under sections 194DA, 194H, 194-IB, and 194 M, the TDS rate has been reduced from 5 percent to 2 percent. The TDS rate for e-commerce operators has also been reduced from 1 percent to 0.1 percent.
Securities Transaction Charges (STT): In Budget 2024, the Securities Transaction Tax (STT) on Securities Futures & Options has been increased to 0.02% and 0.1%, respectively.
It has also been clarified that tax will be levied on those who receive income through share buyback. Both of these changes will come into effect on October 1.