Income Tax: The full Union Budget 2024-25, which was tabled in Parliament on July 23, introduced some changes related to securities transaction tax (STT), TDS rate, Aadhaar card, and share buyback, which will become applicable from October 1. The Vivad se Vishwas Scheme 2.0 will also be implemented from this date. Here are the tax changes that will become applicable from October 1, 2024.
From October 1 onwards, individuals will not be able to quote the Aadhaar Enrollment ID instead of the Aadhaar number, as the provision will be discontinued. The move aims to curb the misuse and duplication issues of PAN.
According to the Union Budget 2024-25 memorandum, Section 139AA of the Act requires individuals eligible for an Aadhaar number to quote it in the PAN application form and income tax returns effective from July 1, 2017.
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“The said provisions allowing the quoting of Aadhaar Enrolment ID in application form for allotment of PAN or in the return of income, was introduced in 2017. Since then, as per data available in public domain, coverage of Aadhaar number has been increasing, and has encompassed majority of the population in India. Hence, it is imperative to discontinue the option of quoting of the Enrolment ID of Aadhaar application form, as any allotment of PAN against the Enrolment ID may lead to duplication and misuse of PAN,” the Budget memorandum stated.
STT
The full Budget 2024-25 proposed to raise the securities transaction tax (STT) on futures and options (F&O) trading to 0.02 per cent and 0.1 per cent of the premium amount, respectively. The changes have already been approved with the Finance Bill amendments, and are set to be effective from October 1.
STT is the tax levied on the buying and selling of various securities, including equity shares, futures, and options.
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TDS Rate on Govt Bonds
The Budget 2024-25 also introduced measures related to the tax deducted at source (TDS) on central and state government bonds, including floating rate bonds. A TDS rate of 10 per cent will be applicable to these bonds from October 1, 2024.
TDS Rates
From October 1, TDS rates for payments under sections 19DA (payment for life insurance policy), 194H (brokerage commission), 194-IB (rent payment by individual/ HUF), and 194M (certain payments by individuals/ HUFs) have been reduced from 5 per cent to 2 per cent. The TDS rate for e-commerce operators has also been reduced from 1 per cent to 0.1 per cent.
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Vivad Se Vishwas 2.0
The government has notified October 1 as the starting date for direct tax dispute resolution scheme Vivad Se Vishwas 2.0. Vivad Se Vishwas scheme 2.0 was originally announced in Budget 2024-25 presented in July for resolution of certain income tax disputes pending appeal.
“The central government hereby appoints the 1st day of October, 2024 as the date on which the Direct Tax Vivad Se Vishwas Scheme, 2024 shall come into force,” the finance ministry said in a notification.
Around 2.7 crore direct tax demands totalling about Rs 35 lakh crore are being disputed at various legal foras.
The first ‘Vivad se Vishwas’ scheme for cases under direct taxes was brought out by the government in 2020. About 1 lakh taxpayers availed the scheme and the government earned taxes of about Rs 75,000 crore.
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Share Buyback
The Union Budget 2024-25 introduced new tax rules on share repurchases, with effect from October 1. The new rules will shift the tax burden from companies to shareholders. Currently, companies pay a 20 per cent tax on buybacks, with no additional tax for investors. However, under the new rules, companies won’t deduct taxes, and investors’ proceeds will be taxed as dividends according to their income tax slab.
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