From October 1, 2024, many changes related to Security Transaction Tax (STT), TDS rate and other financial services levied on futures and options trading (F&O trading) in the stock market are going to be implemented, which will have a significant impact on investors and taxpayers.
While presenting the full budget for the financial year 2024-25, Finance Minister Nirmala Sitharaman announced several changes related to income tax, which is going to be implemented from October 1, 2024.
Increase in Security Transaction Tax
While presenting the budget, the Finance Minister had announced an increase in the Securities Transaction Tax (STT) levied on futures and options trading of shares. STT has been increased from the current level of 0.1 percent to 0.02 percent, which will come into effect from October 1, 2024, that is, investors will have to pay more tax on trading in derivatives. This amendment in income tax was passed with the passage of the Finance Bill.
Tax on buyback of shares
From October 1, 2024, on the buyback of shares, shareholders will have to pay tax on the profit earned from the surrender of shares, just like tax is payable on dividends. Capital gain or loss will be taken into account keeping in mind the cost incurred by the investors in purchasing the shares. This will increase the tax burden on investors.
Floating Rate Bond TDS
It was announced in the budget that TDS will be deducted at the rate of 10 per cent on central government or state government bonds or floating rate bonds from October 1, 2024, which is going to be implemented. Under this change, if the income from investment in bonds is more than Rs 10,000, then TDS will have to be paid at the rate of 10 per cent, but no TDS will have to be paid if the income is less than Rs 10,000.
Changes related to TDS rates
With the passage of the Finance Bill in Parliament, changes in TDS rates were approved, which is going to come into effect from October 1, 2024. The TDS rate under sections 19DA, 194H, 194-IB, 194M of Income Tax has been reduced from 5% to 2%. The TDS rate for e-commerce operators has been reduced from 1% to 0.1%. The CBDT has announced that the Direct Tax Dispute to Vishwas Scheme 2024 will come into effect from October 1, 2024 for the settlement of pending income tax cases.
Changes related to Aadhaar
To prevent misuse and duplication of PAN, the provisions that provided for providing Aadhaar Enrollment ID instead of Aadhaar number while applying for income tax return or PAN will not be applicable from October 1, 2024.