Important Income Tax Changes Applicable from 1 October 2024

Starting October 2024, several key changes related to income tax, Aadhaar card rules, and tax deduction at source (TDS) on mutual funds, rents, and other financial instruments will come into effect. These changes are aimed at improving compliance, streamlining procedures, and reducing litigation for taxpayers. List is quite Long, here are significant updates you need to know:

Vivad Se Vishwas Scheme 2024:

The Central Board of Direct Taxes (CBDT) has officially announced the implementation of the Direct Tax Vivad Se Vishwas Scheme, 2024 via Notification No. 103/2024 dated September 19, 2024. This scheme will be in effect starting October 1, 2024.

Purpose of the Scheme:

• Reduction of Litigation: The scheme aims to reduce the burden of ongoing disputes related to direct taxes, offering a one-time settlement to taxpayers.
• Faster Resolution: Taxpayers are encouraged to resolve issues quickly with incentives for early settlement.

The legal basis for this scheme is established under sub-section (2) of section 88 of the Finance (No. 2) Act, 2024. It is part of the government’s ongoing efforts to simplify tax administration and reduce the compliance burden on taxpayers.

Also Read: Date Extended for Tax Audit FY 2023-24

Aadhaar-PAN Linkage Changes:

Effective from October 1, 2024, the government has decided to discontinue the provision of allowing Aadhaar enrollment ID to be used in place of the Aadhaar number in PAN-related documents. From this date, individuals will need to provide their Aadhaar number, not just the enrollment ID, for PAN allotment and while filing income tax returns.

Also Read Share buyback tax regime to change from October 1, 2024

Post Office Small Savings Scheme Reforms:

Changes to the Public Provident Fund (PPF), Sukanya Samriddhi Yojana, and other small saving schemes operated through post offices will also be implemented from October 1, 2024. These new rules, notified by the Ministry of Finance, focus on:

• Regularization of Accounts: Addressing irregularities such as multiple PPF accounts or accounts opened in the name of minors.
• Extension for NRIs: Modifications related to the extension of PPF accounts for non-resident Indians (NRIs).

Also Read Income Tax Changes for Charitable Trusts from 1st October 2024

TDS Rate Changes:

Changes introduced in the Union Budget 2024 by Finance Minister Nirmala Sitharaman will take effect on October 1, 2024. Key updates include:

• 10% TDS on Central and State Government Bonds: New TDS rates apply to government bonds.
• TDS on Life Insurance: Revised rates for TDS on life insurance policy payouts.
• TDS on Rent Payments: Changes in the TDS rates for house rent and other payments.

Below is a summary of revised TDS rates applicable from October 1, 2024:

Section 194F – TDS on Payments on Repurchase of Units by Mutual Fund or UTI:

• Section 194F, which requires TDS on payments made on repurchase of units by mutual funds or UTI, is proposed to be omitted.
• This change will take effect from October 1, 2024.

Ease in Claiming Credit for TCS Collected/TDS Deducted by Salaried Employees:

The amendment to Section 192(2B) allows salaried employees to take into account any tax deducted or collected under Chapters XVII-B or XVII-BB (TDS or TCS) for the purpose of calculating the TDS on their salary income. This change will simplify the compliance process for employees and reduce the need for refunds.

watch below video to know the other TDS changes for salaried employees:

TDS on Payments to Partners – New Section 194T

• A new section 194T is proposed to be inserted to require TDS on payments of salary, remuneration, interest, bonus, or commission to partners of a partnership firm.
• The TDS rate will be 10% for aggregate payments exceeding Rs. 20,000 in a financial year.
• This change will take effect from April 1, 2025.

TCS on Notified Goods:

• The existing provisions of Section 206C(1F) require TCS on the sale of motor vehicles valued over Rs. 10 lakh.
• The amendment extends this TCS requirement to other luxury goods notified by the Central Government.
• This change will take effect from January 1, 2025.

will be notified by separate notification

TDS on Sale of Immovable Property:

• The amendment clarifies that for TDS purposes under Section 194-IA, the consideration for transfer of immovable property should be calculated on an aggregate basis, even if there are multiple buyers or sellers involved.
• This change will take effect from October 1, 2024.

TDS on Floating Rate Savings (Taxable) Bonds (FRSB) 2020:

• The amendment extends the TDS provisions to cover interest payments on FRSB 2020 and other specified securities.
• The TDS rate will be applicable on interest payments exceeding Rs. 10,000.
• This change will take effect from October 1, 2024.

Other Important Changes:

Excluding Sums Paid Under Section 194J from Section 194C:

• The amendment clarifies that payments covered under Section 194J (fees for professional or technical services) are not considered “work” for the purposes of TDS under Section 194C. This prevents double taxation in such cases.

Extending the Scope for Lower Deduction/Collection Certificate:

• The amendment extends the eligibility for lower deduction certificates to include payments made under Section 194Q (TDS on purchase of goods) and Section 206C(1H) (TCS on sale of goods).
• This provides relief to taxpayers facing losses and reduces the compliance burden.

Notification of Exempt Persons from TCS:

• The amendment allows the Central Government to notify certain persons or classes of persons who are exempt from TCS under Section 206C.
• This will benefit entities that are exempt from income tax but face difficulties due to TCS requirements.

Hike in Securities Transaction Tax (STT):

Changes in the Securities Transaction Tax (STT) on futures and options (F&O) trades will also be implemented from October 1, 2024:

• STT on Sale of Options: The rate will increase from 0.0625% to 0.1% of the premium.
• STT on Sale of Futures: The rate will rise from 0.0125% to 0.02% of the trade price.

Changes in Penalties and Refunds:

Changes introduced under the Finance Act (No. 2), 2024 regarding penalties and refunds will be effective from October 1, 2024:

• Limitation Period for Penalties: The timeline for imposing penalties will be rationalized to provide more clarity and reduce ambiguity.
• Withholding of Refunds: Changes in how refunds are withheld by tax authorities, with clearer conditions on when refunds can be withheld.

Amendments to Tax Assessment and Reassessment:

Starting from September 1, 2024, changes in tax assessment rules, particularly for cases involving searches and requisitions, have been introduced. This includes the implementation of the block assessment regime, designed to reduce the burden of multiple assessments and provide quicker resolutions for taxpayers.

As of October 2024, several key updates in the Indian tax system will come into effect, impacting areas like Aadhaar-PAN linkage, TDS rates, securities transactions, and tax assessments. The introduction of the Vivad Se Vishwas Scheme 2024 provides a new opportunity for taxpayers to settle disputes and reduce litigation, aligning with the government’s ongoing efforts to simplify tax procedures.

Also read NPS Vatsalya: How your child can get more than ₹10 crore for retirement if you contribute…

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