Income Tax Updates: 6 Budget 2024 Rules Effective 1st October

The Indian Budget 2024 has given some significant changes in the income tax regime out of which many were effective from 1st October 2024. Many changes affect individuals, corporations and the taxpayers in general. But what is it all about? Here are the six key rules summarized below for your information, as they immediately impact your tax filings and financial planning:

1. Updated TDS Rates on Certain Transactions

TDS has been significantly revised. It will be effective from 1st October 2024 when the TDS rate on certain non-salary income like the dividend from mutual funds, interest on securities, and post office savings will be decreased to 5% from 10%. This is very much useful to an investor as it enhances his liquidation and thereby enhances returns. They would therefore get a larger share of their incomes at the outset and would still have the burden of tax liabilities while filing.

2. Compulsion for linking Aadhaar with PAN

The other significant change in the Budget 2024 rules is making the Aadhaar-PAN linkage mandatory. Again it is proposed that if an individual does not link his PAN with Aadhaar then from October 1, 2024, the PAN shall become operative. That means, if the PAN of any person is incorrect then he or she cannot undertake any financial operation like filing of return of income, opening of a bank account, or investing in Mutual funds. Therefore, it will become essential for the taxpayers to verify any linkage made with Aadhaar and PAN in order to avoid any issues or complications concerning the tax return.

3. Legal Status of the Taxation of Winnings from online gaming

The government has also made it rigid on taxation of winnings that are won from online gaming websites. At present, from 01.10.2024, all the monetary consideration received through online games attracts TDS @ 30%. Since from this year itself TDS is deducted on the earnings irrespective of any ceiling as the earlier times which were having the provision of no TDS deduction where the gaming incomes were below ₹10,000. Now all the incomes are treated equally as it relates in the report of gaming income and the final tax burdens which gamers as well as casual players bear.

4. STT Increased (Securities Transaction Tax)

Investors will also need to keep a check on the securities trading that is taking place as the government has increased the Securities Transaction Tax (STT) imposed on the sale of shares, derivatives, and many more. Now, take the example of the futures contract STT, which has increased to 0.0125 percent from 0.01 percent. This is probably likely to increase the trading cost slightly for high-frequency traders and investors but will be helpful in increasing revenue collections for the government from the stock market.

 5. Amendment to Vivad Se Vishwas Scheme 2024

The most popular "Vivad Se Vishwas" scheme for resolving tax disputes properly has been revamped in Budget 2024. Thereby, taxpayers are allowed to settle all their existing tax disputes on or before 31 March 2025 by paying only a reduced amount of the tax demand. This is an inviting step for taxpayers with disputes against the tax authority; these taxpayers can now clear cases while still making payments without huge penalties or interest. It constitutes a window where people and firms can clear cases easily and quickly, especially for very old cases.

 6.Interest on Housing Loans Enhanced Deduction

On encouraging home ownership, the government has the tax authority amend and increase the prescribed deduction on home loan interest. Section 24(b) of the Income Tax Act will be amended to allow an increased amount of deduction on account of interest paid on housing loans. As on date, the limit for deduction stands at ₹3.5 lakh whereas it used to be ₹2 lakh earlier. This will considerably alleviate the house purchase burden that has been caused on middle-class and first-time homebuyers by saving their money.

CONCLUSION

The recent changes in income tax enacted on 1st October 2024 depict that the government objective in this amendment is to ease tax compliance for the population while generating increased revenue through new and updated policies. It is thus indispensable for any taxpayer to be well abreast with these changes so that he or she will not be surprised at the time of his next tax filing. Whether it is an individual investor, homebuyer, or a professional gamer, these updates are likely to impact your financial planning.

For expert tax advice, take advantage of the best tax consultant in Bangalore, Mind Your Tax to help you through this process. Our experienced team, with years of excellent practice, will guide you step by step in relation to the intricacies of new tax rules so that you can optimize your tax strategy with perfect compliance. Do you need help in filing, planning, or dispute resolution? We are here and just a call away.