ntroduction
The Union Budget 2024-25 has introduced several pivotal changes in the regulations for Tax Deducted at Source (TDS). These amendments aim to enhance compliance, streamline tax procedures, and reduce the compliance burden on taxpayers. The changes impact various sections of the Income Tax Act, including 271H, 200, 197, 194-IA, and others. Understanding these amendments is crucial for taxpayers to navigate the new landscape effectively and ensure timely compliance. Below is a detailed table summarizing the key changes in TDS provisions introduced in the Union Budget 2024-25.
Summary of TDS Changes in Union Budget 2024-25
| Section | Existing Provision | Proposed Provision | Threshold | Effective Date |
|---|---|---|---|---|
| 271H | Penalties for late/incorrect TDS/TCS returns (INR 10,000 to INR 1,00,000). No penalty if TDS/TCS, fees, and interest are paid, and return is filed within one year of the due date. | No penalty if TDS/TCS, fees, and interest are paid, and return is filed within one month of the due date. | N/A | April 1, 2025 |
| 200 | No time limit for correction statements. | Correction statements cannot be filed after six years from the end of the financial year in which the original statement was delivered. | N/A | April 1, 2025 |
| 197 | Sections 194Q and 206C not included for lower deduction/collection certificates. | Inclusion of Section 194Q and sub-section (1H) of Section 206C for lower deduction/collection certificates. | N/A | October 1, 2024 |
| 194-IA | TDS of 1% on higher of sale consideration or stamp duty value if both exceed INR 50 lakh. | TDS based on aggregate consideration paid by all transferees when multiple parties are involved. | INR 50 lakh | October 1, 2024 |
| 206C(1F) | TCS at 1% on sale of motor vehicles exceeding INR 10 lakh. | TCS extended to other luxury goods exceeding INR 10 lakh as notified by the Central Government. | INR 10 lakh | Not specified |
| 194T | No such provision earlier. | TDS at 10% on aggregate payments exceeding INR 20,000 per financial year, including salary, remuneration, commission, bonus, and interest to partners. | INR 20,000 | April 1, 2025 |
| 206(7) | Interest at 1% per month on late TCS deposits. | Interest increased to 1.5% per month for late TCS deposits. | N/A | April 1, 2025 |
| 192(2B) | Consideration of other income and TDS for deduction purposes. | Expanded to include any tax deducted or collected under Chapter XVII-B or XVII-BB. | N/A | April 1, 2025 |
| 194F | TDS at 20% on payments for repurchase of mutual fund units. | Section 194F omitted. | N/A | October 1, 2024 |
| 194O | TDS at 1% on gross sales or services facilitated by e-commerce operators. | TDS rate reduced to 0.1%. | N/A | October 1, 2024 |
| 194M | TDS at 5% on contract work, commission, or professional fees. | TDS rate reduced to 2%. | N/A | October 1, 2024 |
| 194-IB | TDS at 5% on rent exceeding INR 50,000 per month. | TDS rate reduced to 2%. | INR 50,000 per month | October 1, 2024 |
| 194H | TDS at 5% on commission or brokerage. | TDS rate reduced to 2%. | N/A | October 1, 2024 |
| 194G | TDS at 5% on commission, remuneration, or prize on lottery tickets. | TDS rate reduced to 2%. | INR 15,000 | October 1, 2024 |
| 194DA | TDS at 5% on income from life insurance policy payouts. | TDS rate reduced to 2%. | N/A | October 1, 2024 |
| 194D | TDS at 5% on insurance commission (for persons other than companies). | TDS rate reduced to 2%. | N/A | April 1, 2025 |
These amendments are designed to simplify the TDS process, ensure timely collection of taxes, and provide clarity on various provisions. Taxpayers should familiarize themselves with these changes to avoid penalties and make the most of the new provisions.
