As of October 1, 2024, several proposals announced by Finance Minister Nirmala Sitharaman during the Budget 2024-25 will be implemented, marking a significant shift in the income tax landscape. Here are six key changes that taxpayers need to be aware of:
Discontinuation of Aadhaar Enrolment ID
Effective today, the government will no longer allow taxpayers to quote their Aadhaar Enrolment ID instead of the Aadhaar number. This move is aimed at streamlining the identification process for taxpayers, ensuring that all references to Aadhaar are consistent and secure.
Rationalisation of Tax Deducted at Source (TDS) Rates
From today, the TDS rates will be revised significantly. For certain sections, the TDS rate will drop from 5% to 2%. Additionally, Section 194F, which currently imposes a TDS rate of 20%, will be omitted altogether, thereby simplifying tax deductions for many taxpayers.
Floating Rate Savings Bonds Taxation
With the new regulations, Floating Rate Savings Bonds, 2020 (Taxable) and any other government securities will be subject to tax deductions if the interest earned exceeds ₹10,000 in a financial year. This change aims to increase transparency and ensure that high earners contribute appropriately to tax revenues.
Increased Security Transactions Tax on Futures and Options
The government has proposed an increase in the Security Transactions Tax (STT) for futures and options. The STT for futures will now be set at 0.02%, while for options, it will rise to 0.1%. This adjustment reflects the government's intent to enhance revenue from speculative trading activities.
Tax on Share Buybacks
Starting today, the income received from the buyback of shares will be taxed in the hands of the recipient. This measure aims to create equity in the taxation of corporate actions and ensure that individuals participating in share buybacks are contributing their fair share of taxes.
Introduction of Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024
The DTVSV Scheme, effective from today, provides a framework for taxpayers to settle disputes with the tax department. New appellants will benefit from lower settlement amounts compared to older appellants. Moreover, taxpayers who file declarations before December 31, 2024, will enjoy reduced settlement amounts compared to those who file later.
