Finance Minister Nirmala Sitharaman has announced that the Budget 2024 has introduced several significant amendments to the Income Tax Act of 1961, which will come into effect on October 1, 2024. Some areas include changes in rates of TDS, changes in rates of STT, introduction of schemes etc. Such changes are passed in the Finance Bill.
An overview of the significant amendments
TDS on Floating Rate Bonds
Section 193 of the Income Tax Act, 1961 – Deduction of tax at source on payment of any income to a resident by way of interest on securities
Applicable TDS rate – 10% on the income earned on Floating Rate Bonds
Exemptions – No TDS will be deducted if the total income earned from these bonds in a financial year is less than ₹10,000.
Applicable on – Floating Rate Savings Bonds (FRSB) 2020 (Taxable) & Any security of Central & State Government
Impact - Assessees earning over ₹10,000 from these bonds will face increased tax liability, leading to a reduction in net return.
Revised TDS Rates
TDS rates have been reduced for certain sections –
| Section | Present TDS rate | Proposed TDS rate | With effect from |
| 194D - Payment of insurance commission (in case of a person other than a company) | 5% | 2% | 1.4.2025 |
| Section 194DA - Payment in respect of life insurance policy | 5% | 2% | 1.10.2024 |
| Section 194G – Commission etc on sale of lottery tickets | 5% | 2% | 1.10.2024 |
| Section 194H - Payment of commission or brokerage | 5% | 2% | 1.10.2024 |
| Section 194-IB - Payment of rent by certain individuals or HUF | 5% | 2% | 1.10.2024 |
| Section 194M - Payment of certain sums by certain individuals or Hindu undivided family | 5% | 2% | 1.10.2024 |
| Section 194-O - Payment of certain sums by e-commerce operator to e-commerce participant | 1% | 0.1% | 1.10.2024 |
| Section 194F - Payments on account of repurchase of units by Mutual Fund or Unit Trust of India | Proposed to be omitted | Proposed to be omitted | 1.10.2024 |
Buy-back of Shares
There will be a shift in tax responsibility in case of buyback of shares from October 1, 2024.
The shareholders, rather than the companies, will be taxed on buyback proceeds.
As per the Budget 2024 memorandum, “the sum paid by a domestic company for the purchase of its own shares shall be treated as a dividend in the hands of shareholders, who received payment from such buy-back of shares and shall be charged to income-tax at applicable rates. No deduction for expenses shall be available against such dividend income while determining the income from other sources.”
The companies are required to withhold TDS in case of buyback of securities at –
- 10% in case of residents
- 20% in case of non-residents
Direct Tax Vivad Se Vishwas Scheme
The VSV 2.0 or DTVSV 2024 The Union Government has introduced a scheme with effect from October 1, 2024, to settle tax-related disputes that are pending before the Appellate authorities, High Court, Supreme Court, Dispute Resolution Panel and revised applications filed before Income Tax Commissioner. Rules for -
New Appellants: Lower settlement amounts for those filing after July 22, 2024
Old Appellants: Standard settlement amounts for those with pending appeals as of July 22, 2024.
The last date to avail the scheme is December 31, 2024
For more details Click Here
Discontinuation of Aadhaar for PAN and ITR -
Starting October 1, 2024, it will no longer be mandatory to quote Aadhaar Number for PAN applications or ITR filings.
However, Aadhaar can still be used for other purposes such as linking it to your bank account or mobile number.
In case a taxpayer does not possess an Aadhaar Number, they are still eligible to use other identification documents such as a passport or driving license.
Section 139AA of the Income Tax Act, 1961, states that every person who is eligible to obtain an Aadhaar number shall on or after the 1st day of July 2017, quote an Aadhaar number in the application form for allotment of PAN and in the return of income.
Also, the Budget Memorandum has stated that “The said provisions allowing the quoting of Aadhaar Enrolment ID in the application form for allotment of PAN or in the return of income, was introduced in 2017. Since then, as per data available in the public domain, coverage of the Aadhaar number has been increasing and has encompassed the majority of the population in India. Hence, it is imperative to discontinue the option of quoting the Enrolment ID of the Aadhaar application form, as any allotment of PAN against the Enrolment ID may lead to duplication and misuse of PAN.”
Higher Securities Transaction Tax (STT)
As per the Budget 2024, the Securities Transaction Tax (STT) has been increased on futures and options (F&O) trading.
Currently, STT on delivery trades in equity shares is at 0.1% on both purchase and sale transactions and STT on the sale of an option in securities where the option is exercised is at 0.125% of the intrinsic price.
STT rates for-
The sale of an option in securities will be increased from 0.0625% of the option premium to 0.1% of the option premium.
The sale of a future in securities will be increased from 0.0125% of the price at which such futures are traded to 0.02% of the price at which such futures are traded.
These are some of the significant changes mentioned in the Budget 2024 Memorandum.
There may be other relevant changes that one should be aware of. One can take advice from a Tax Professional or a Chartered Accountant to ensure compliance with the new rules.
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