Several significant tax and financial proposals outlined in the Union Budget 2024 have come into effect as of October 1, following their ratification in the Finance Bill. These changes impact various areas, including Tax Deducted at Source (TDS) rates, buybacks of shares, and securities transaction tax (STT), along with rules affecting credit and debit card usage and post office schemes.
TDS on sale of immovable property
For immovable property transactions exceeding Rs 50 lakh, a 1% TDS will now be deducted. In cases where there are multiple buyers or sellers, the new rules clarify that this provision applies collectively, effective from October 1, 2024.
Revised TDS rates
The revised TDS rates, which were proposed in the budget, have now been implemented. Some of the key changes include:
TDS rates for payments under sections 194DA, 194H, 194-IB, and 194M have been reduced from 5% to 2%.
E-commerce operators will now be subject to a TDS rate of 0.1%, down from 1%.
For payments related to life insurance policies (Section 194DA), the TDS rate has been lowered from 5% to 2%.
TDS on rent payments by individuals or HUF (Section 194-IB) has also been reduced from 5% to 2%.
The TDS rate on the commission from the sale of lottery tickets (Section 194G) has been reduced to 2%.
Payments by e-commerce operators to participants (Section 194-O) will now attract a 0.1% TDS, down from 1%.
Section 194F, which related to payments for repurchase of mutual fund units or Unit Trust of India units, has been omitted.
Floating Rate Bonds TDS
Starting from October 1, 2024, TDS will be deducted at a 10% rate from specified central and state government bonds, including floating rate bonds. This rule applies only if the revenue earned exceeds Rs 10,000 in a year. Below this threshold, no TDS will be deducted.
Buybacks and Securities Transaction Tax (STT)
As of October 1, buybacks of shares are now subject to shareholder-level taxes, similar to dividends. This will likely result in a higher tax burden for investors. Shareholders’ acquisition costs will also be considered when calculating capital gains or losses.
The budget has also increased the STT on Futures & Options (F&O) of securities, with the tax on futures transactions now at 0.02% and on options transactions at 0.1%. These amendments became effective from October 1, 2024.
