Six New Income Tax Rules Effective from October 1, 2024

Six New Income Tax Rules Effective from October 1, 2024

Several important changes in the Indian tax system, as announced during the Union Budget 2024-25, take effect from today. Here are the six key updates taxpayers need to be aware of:

1. Mandatory Aadhaar Number for Tax Filing
   From today, taxpayers can no longer use their Aadhaar Enrolment ID for tax-related purposes. The actual Aadhaar number must now be quoted, streamlining identification and enhancing security.
2. Revised TDS Rates
   The government has made notable revisions to Tax Deducted at Source (TDS) rates. TDS for certain sections has been reduced from 5% to 2%, making tax deductions more favorable for taxpayers. Additionally, Section 194F, which imposed a 20% TDS, has been removed.
3. Taxation of Floating Rate Savings Bonds
   Interest earned on Floating Rate Savings Bonds, 2020 (Taxable), and other government securities will now attract tax if it exceeds ₹10,000 in a financial year. This change ensures that higher-income earners contribute more appropriately to tax revenues.
4. Increased Security Transactions Tax (STT)
   Increased Security Transactions Tax (STT) on Futures and Options To generate additional revenue from speculative trading, the STT on futures is increased to 0.02%, while options trading will attract 0.1%.
5. Tax on Share Buybacks
   Income from share buybacks will now be taxed in the hands of the recipients, ensuring fair taxation across corporate transactions and removing previous exemptions.
6. Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024
   The new DTVSV Scheme provides a mechanism for taxpayers to settle disputes with the tax department. Those who opt for early settlement before December 31, 2024, will benefit from lower settlement amounts, with older appellants facing higher settlement figures.

These changes represent the government’s efforts to simplify tax administration and ensure equitable contributions from all taxpayers.