October 2024: From TDS to saving schemes, 13 changes that will impact you

October has arrived, bringing with it a series of financial changes that could affect your pocket. From new Aadhaar card rules to updates in tax deductions, here’s what you need to know about the key financial changes happening this month.

1. Aadhaar card rule related to PAN allotment

Starting today (October 1), the option to use an Aadhaar enrolment ID instead of the Aadhaar number for PAN allotment is no longer available. This means, individuals will no longer need to disclose their Aadhaar enrollment ID in PAN allotment documents and while filing income tax returns.

2. Changes in post office small saving schemes

 

New rules affecting small savings schemes like the Public Provident Fund (PPF) and Sukanya Samriddhi Yojana will come into effect on October 1, 2024. Under these rules, guardians can no longer open multiple PPF accounts for minors, as only one account per child will be permitted. Accounts opened in violation of this rule will earn a reduced interest rate of 4%, instead of the usual 7.1%. Additionally, for NRIs, PPF accounts will no longer accrue interest from this date, marking a shift for those holding accounts opened before their change in residency status.

3. TDS rate changes

The Union Budget 2024 included several significant proposals, which have been ratified in the Finance Bill. One of the changes that come into effect today is revised Tax Deducted at Source (TDS) rates.

TDS rates effective from October 1, 2024:

E-commerce operators: The TDS rate for payments made by e-commerce operators has been reduced from 1% to 0.1%.  

Section 194DA: TDS on payments from life insurance policies has been reduced from 5% to 2%.  

Section 194G: The TDS on commission from the sale of lottery tickets has been reduced from 5% to 2%.  

Section 194-IB: The TDS on rent payments by certain individuals or HUFs is now reduced from 5% to 2%.  

Section 194M: TDS on payments made by individuals or Hindu Undivided Families (HUFs) for certain sums has been reduced from 5% to 2%.  

Section 194-O: TDS on payments made by e-commerce operators to participants has been reduced from 1% to 0.1%.  

Section 194F: This section, related to TDS on payments for the repurchase of units by Mutual Funds or Unit Trust of India, is proposed to be omitted.

4. Floating rate bonds TDS

In Budget 2024, it was announced that starting from October 1, 2024, TDS will be deducted at a 10% rate from specified central and state government bonds, including floating rate bonds.

There is a Rs 10,000 threshold limit, after which the tax is deducted. This means that there is no TDS if the revenue earned throughout the year is less than Rs 10,000.

5. TDS on sale of immovable property

Section 194-IA: This provision stipulates that payments for the sale of immovable property exceeding Rs 50 lakh must include a 1% TDS. In transactions involving many buyers or sellers, the new budget makes it clear that this rule applies collectively. The amendments will take effect from today.

6. NSE, BSE revise transaction charges

From October 1, the BSE and NSE are revising their transaction fees for equity and derivatives trading. This comes in line with Sebi’s new mandate for a uniform fee structure. The BSE will impose a transaction fee of Rs 3,250 per crore of premium turnover for Sensex and Bankex options contracts, while for other equity derivative contracts, the existing fees remain unchanged.

The NSE, on the other hand, has set transaction fees for its cash market at Rs 2.97 per lakh of traded value, with Rs 1.73 per lakh for equity futures and Rs 35.03 per lakh for equity options.

7. Hike in securities transaction tax (STT)

From October 1, trading in futures will now be taxed at 0.02%, up from 0.0125%. Options trading will see an STT rate of 0.1%. This change aims to discourage excessive retail derivative trading, which has surged in recent months.

8. New taxation on share buybacks

Finance Minister Nirmala Sitharaman also announced that income from share buybacks will now be taxed as dividends in the hands of shareholders from October 1. Previously considered a tax-efficient way to return cash to investors, the new rules shift the tax burden from companies to individual shareholders.

9. Key facts statement for borrowers

Starting October 1, banks and non-banking financial companies (NBFCs) will be required to provide a "Key Facts Statement" (KFS) to borrowers. This document will clearly outline all fees, charges, and terms associated with loans, providing greater transparency for borrowers.

10. Health insurance waiting periods reduced

Health insurance policies will also see improvements in October. The waiting period for pre-existing diseases is being cut from four years to three years, according to the Insurance Regulatory and Development Authority of India (IRDAI). Additionally, the moratorium period has been shortened from eight years to five years, meaning claims cannot be contested after this time except in cases of fraud.

11. Higher surrender values for endowment policies

Policyholders exiting endowment policies early will now receive a higher surrender value from October 1. Under new Irdai regulations, partial refunds of premiums will be offered to those who terminate their policies early, improving the financial security of policyholders.

12. Faster trading for bonus shares

From October 1, investors will be able to trade bonus shares more quickly, as Sebi has reduced the time between the record date and trading from two weeks to two days. This move is expected to improve liquidity and efficiency in the stock market.

13. Vivad Se Vishwas 2024

The new 'Vivad Se Vishwas 2024' scheme offers taxpayers a chance to resolve disputes related to direct taxes, including income tax, interest, penalties, and court fees. Disputes pending as of July 22, 2024, can be settled under this scheme. In the case of new disputes, the settlement amount will be lower. Those willing to settle the dispute before December 31, 2024, will need to pay either the full tax amount or up to 25 per cent of the disputed tax amount, interest, penalty, or fee. After December 31, the payment will increase to 110 per cent of the disputed tax amount or 30 per cent of the interest, penalty, or fee.