From October 1, 2024, several new income tax rules are set to come into effect. These updates, introduced in the 2024 budget, will impact various financial aspects, including Aadhaar regulations, Securities Transaction Tax (STT), Tax Deducted at Source (TDS) rates, and more. If you are filing income tax returns or investing in the stock market, it’s crucial to stay informed about these changes to avoid potential issues. Let’s break down the key updates coming into force this October.
1. Securities Transaction Tax (STT) Increased for F&O
One of the major changes is an increase in STT for Futures and Options (F&O) trading. If you’re involved in the stock market, especially in F&O, this update will impact your trading costs:
- STT on Futures: The tax on futures transactions will go up by 0.02%.
- STT on Options: Options trading will see a 0.1% increase in STT.
Additionally, earnings from share buybacks will now also be subject to taxes, further increasing the tax obligations for stock market investors.
2. Aadhaar and PAN Changes in ITR Filing
Starting October 1, 2024, the use of an Aadhaar enrollment ID in place of an Aadhaar number for PAN applications or income tax returns (ITR) will no longer be allowed. This change is aimed at reducing PAN misuse and duplication, making tax filing more secure. If you still haven’t linked your Aadhaar and PAN, you will need to do so before filing your next ITR.
3. Share Buyback Taxation
A major shift is coming for shareholders with respect to share buybacks. Earlier, the tax burden was on the company executing the buyback. But from October, shareholders will be taxed on the income earned through buybacks, similar to dividends. The acquisition cost of the shares will also be considered when calculating capital gains or losses during the buyback process.
4. TDS on Floating Rate Bonds
Another key change affects floating rate bonds issued by the central and state governments. From October 1, 2024, a 10% TDS will be deducted on interest earnings from these bonds. However, if the total interest earned for the year is below ₹10,000, no TDS will be applied. Investors in government bonds should be aware of this to avoid any surprises.
5. New TDS Rates on Various Payments
Several reductions in TDS rates will be introduced across different sections:
- TDS for payments under Sections 194DA, 194H, 194-IB, and 194M will be reduced from 5% to 2%.
- TDS for e-commerce operators will be cut down from 1% to just 0.1%.
These changes are designed to ease the tax burden on certain payments, especially for e-commerce businesses and landlords.
6. Direct Tax Vivaad Se Vishwas Scheme 2024
The Direct Tax Vivaad Se Vishwas Scheme (DTVSV) 2024 is coming into effect to help settle pending tax disputes. This new version of the scheme allows for a lower settlement amount for those filing as ‘new appellants’ compared to ‘old appellants.’ This initiative aims to streamline tax disputes and encourage faster resolution for both taxpayers and the government.
By keeping these changes in mind, taxpayers and investors can make more informed decisions ahead of the October 1 deadline.
