The Union Budget 2024-25 introduces significant changes in the regulations for Tax Deducted at Source (TDS). These amendments are aimed at enhancing compliance and simplifying tax procedures, affecting various sections of the Income Tax Act. Understanding these changes is crucial for taxpayers to navigate the new landscape effectively and ensure timely compliance.
Detailed Overview of Key Changes in TDS
Section 271H: Penalty Provisions
- Existing Provision: Imposes penalties ranging from INR 10,000 to INR 1,00,000 for failure to furnish TDS/TCS returns within due dates or for furnishing incorrect information.
- Proposed Provision: No penalty will be levied if TDS/TCS is paid, and the statement is filed within one month from the prescribed time after paying the late fees and interest.
- Effective Date: 1st April 2025
Section 200: Time Limit for Correction Statements
- Existing Provision: No specified time limit for furnishing correction statements.
- Proposed Provision: Correction statements must be furnished within six years from the end of the financial year in which the original statement was filed.
- Effective Date: 1st April 2025
Section 197: Lower Deduction Certificate
- Existing Provision: Sections 194Q and 206C(1H) are not covered under this section.
- Proposed Provision: Section 194Q (TDS on purchase of goods) and sub-section (1H) of Section 206C (TCS on sale of goods) are now included.
- Effective Date: 1st October 2024
Section 194-IA: TDS on Sale of Immovable Property
- Existing Provision: A 1% TDS is deducted on the higher of the consideration amount or stamp duty value for properties where the sale consideration exceeds INR 50 lakh.
- Proposed Provision: The aggregate value will be considered when properties are transferred with multiple transferors or transferees.
- Effective Date: 1st October 2024
Section 206C(1F): Collection of TCS on Luxury Goods
- Existing Provision: A 1% TCS is collected on the sale of motor vehicles exceeding INR 10 lakh.
- Proposed Provision: The scope is extended to include other luxury goods exceeding INR 10 lakh.
- Effective Date: 1st April 2025
Section 194T: TDS on Payments to Partners
- New Provision: Introduces a 10% TDS on salary, remuneration, commission, bonus, and interest paid to partners if the total amount exceeds INR 20,000 in a financial year.
- Effective Date: 1st April 2025
Section 206(7): Interest on Late Payment of TCS
- Existing Provision: Imposes an interest rate of 1% per month for late deposit of TCS.
- Proposed Provision: The interest rate is increased to 1.5% per month.
- Effective Date: 1st April 2025
Section 192(2B): Ease in Claiming TCS/TDS Credit
- Existing Provision: Allows credit for TDS under other heads of income.
- Proposed Provision: Expanded to allow credit for all taxes deducted or collected.
- Effective Date: 1st April 2025
Section 194F: TDS on Repurchase of Units by Mutual Fund or UTI
- Existing Provision: Imposes a 20% TDS on repurchase payments made by mutual funds or the Unit Trust of India (UTI).
- Proposed Provision: Section 194F is to be omitted.
- Effective Date: 1st October 2024
Section 194O: TDS for E-commerce Operators
- Existing Provision: Imposes a 1% TDS on the gross amount of sales or services facilitated by e-commerce operators.
- Proposed Provision: The TDS rate is reduced to 0.1%.
- Effective Date: 1st October 2024
Section 194M: TDS on Certain Payments by Individuals or HUF
- Existing Provision: Imposes a 5% TDS on payments made by individuals or HUFs for work, commission, or professional fees if the total exceeds INR 50 lakh in a financial year.
- Proposed Provision: The TDS rate is reduced to 2%.
- Effective Date: 1st October 2024
Section 194-IB: TDS on Rent Payments by Individuals or HUF
- Existing Provision: Imposes a 5% TDS on rent exceeding INR 50,000 per month paid by individuals or HUFs.
- Proposed Provision: The TDS rate is reduced to 2%.
- Effective Date: 1st October 2024
Section 194H: TDS on Commission or Brokerage
- Existing Provision: Imposes a 5% TDS on commission or brokerage payments.
- Proposed Provision: The TDS rate is reduced to 2%.
- Effective Date: 1st October 2024
Section 194G: TDS on Lottery Commission
- Existing Provision: Imposes a 5% TDS on lottery commission payments.
- Proposed Provision: The TDS rate is reduced to 2%.
- Effective Date: 1st October 2024
Section 194DA: TDS on Life Insurance Policy Payments
- Existing Provision: Imposes a 5% TDS on income from life insurance policy payments.
- Proposed Provision: The TDS rate is reduced to 2%.
- Effective Date: 1st October 2024
Section 194D: TDS on Insurance Commission
- Existing Provision: Imposes a 5% TDS on insurance commission payments.
- Proposed Provision: The TDS rate is reduced to 2%.
- Effective Date: 1st April 2025
Summary Table of Changes
| Section | Provision | Existing Rate/Provision | Proposed Rate/Provision | Effective Date |
|---|---|---|---|---|
| 271H | Penalty for TDS/TCS return issues | INR 10,000 - 1,00,000 | No penalty if filed within 1 month | 1st April 2025 |
| 200 | Time limit for correction statements | No limit | 6 years | 1st April 2025 |
| 197 | Lower deduction certificate | Sections 194Q, 206C(1H) not covered | Includes Sections 194Q, 206C(1H) | 1st October 2024 |
| 194-IA | TDS on immovable property | 1% | Aggregate value considered | 1st October 2024 |
| 206C(1F) | TCS on luxury goods | 1% on motor vehicles | Includes other luxury goods | 1st April 2025 |
| 194T | TDS on payments to partners | N/A | 10% on amounts > INR 20,000 | 1st April 2025 |
| 206(7) | Interest on late TCS payment | 1% | 1.5% | 1st April 2025 |
| 192(2B) | Claiming TCS/TDS credit | Limited scope | Expanded to all deducted/collected taxes | 1st April 2025 |
| 194F | TDS on mutual fund repurchase | 20% | Omitted | 1st October 2024 |
| 194O | TDS for e-commerce operators | 1% | 0.1% | 1st October 2024 |
| 194M | TDS on certain payments by individuals/HUF | 5% | 2% | 1st October 2024 |
| 194-IB | TDS on rent by individuals/HUF | 5% | 2% | 1st October 2024 |
| 194H | TDS on commission/brokerage | 5% | 2% | 1st October 2024 |
| 194G | TDS on lottery commission | 5% | 2% | 1st October 2024 |
| 194DA | TDS on life insurance policy payments | 5% | 2% | 1st October 2024 |
| 194D | TDS on insurance commission | 5% | 2% | 1st April 2025 |
These changes are designed to streamline TDS procedures and enhance tax compliance.
