USA, Chicago: Key Financial Changes Starting October 1, 2024

Several important financial updates, outlined in the Union Budget 2024, will take effect from October 1, 2024. These include changes to income taxes, Aadhaar and PAN card rules, the Securities Transaction Tax (STT), TDS rates, and the Direct Tax Vivad Se Vishwas Scheme 2024. These modifications were passed through the Finance Bill and are set to impact taxpayers and investors.

Here are the major financial changes taking effect from October 1:

1. Securities Transaction Tax (STT): The STT on Futures and Options (F&O) has been increased to 0.02% and 0.1%, respectively, as per the 2024 budget. Additionally, income from share buybacks will now be taxed at the recipient's level. These changes are part of the Finance Bill and will be enforced from October 1, 2024.

2. Aadhaar and PAN: To prevent misuse and duplication of PAN cards, starting October 1, individuals will no longer be able to use an Aadhaar Enrollment ID instead of an Aadhaar number. Furthermore, Aadhaar details will no longer be required in income tax returns (ITRs) or PAN applications.

3. Share Buybacks: Beginning October 1, share buybacks will be taxed at the shareholder level, similar to how dividends are taxed. This will increase investors' tax burden, as the acquisition cost of shares will now be considered in capital gains or losses calculations.

4. TDS on Floating Rate Bonds: From October 1, 2024, a 10% tax deducted at source (TDS) will apply to certain central and state government bonds, including floating rate bonds. However, this will only apply if the income from these bonds exceeds ₹10,000 in a year.

5. TDS Rate Changes: The 2024 Union Budget proposed changes to TDS rates, which have now been approved. TDS for payments under sections 19DA, 194H, 194-IB, and 194M will be reduced from 5% to 2%. Additionally, the TDS rate for e-commerce operators will be cut from 1% to 0.1%.

6. Direct Tax Vivad Se Vishwas Scheme 2024: The Central Board of Direct Taxes (CBDT) has announced that the Direct Tax Vivad Se Vishwas Scheme 2024 will come into force on October 1. This scheme aims to reduce income tax disputes by allowing taxpayers to settle ongoing cases, including those pending in the Supreme Court, high courts, and other appellate authorities as of July 22, 2024.