The Budget 2024 has introduced notable changes to Tax Deducted at Source (TDS) rates, aimed at simplifying compliance for taxpayers and easing the financial burden on businesses and individuals. The amendments involve a reduction in TDS rates across several sections, reflecting a broader effort to improve financial operations. Below is a detailed chart outlining the changes effective October 1, 2024:
| Section | Existing Provision | Amended Provision | Effective Date |
|---|---|---|---|
| 194D | TDS on insurance commission: 5% for payments made to residents (non-company entities). | TDS reduced to 2% for payments made to residents (non-company entities). | April 1, 2025 |
| 194DA | TDS on life insurance payouts: 5% on the amount of income (excluding non-taxable amounts). | TDS reduced to 2% on the amount of income. | October 1, 2024 |
| 194F | TDS on repurchase of mutual fund units: 20% on repurchase amounts. | Removed altogether (not applicable). | October 1, 2024 |
| 194G | TDS on lottery ticket commissions: 5% on commission payments. | TDS reduced to 2% on commission payments. | October 1, 2024 |
| 194H | TDS on commission/brokerage: 5% on commission or brokerage payments. | TDS reduced to 2% on commission or brokerage payments. | October 1, 2024 |
| 194IB | TDS on rent payments: 5% for monthly rent exceeding ₹50,000. | TDS reduced to 2% for monthly rent exceeding ₹50,000. | October 1, 2024 |
| 194IA | TDS on purchase of immovable property: 1% if consideration is ₹50 lakhs or more. | Clarification: TDS applies if the total value exceeds ₹50 lakhs, even if split among multiple buyers or sellers. | October 1, 2024 |
| 194M | TDS on certain payments by individuals/HUFs: 5% on payments exceeding ₹50 lakhs. | TDS reduced to 2% on payments exceeding ₹50 lakhs. | October 1, 2024 |
| 194O | TDS on e-commerce transactions: 1% on gross sales/services. | TDS reduced to 0.1% on gross sales/services. | October 1, 2024 |
| Section 197 | Lower TDS/TCS certificates were not applicable for Sections 194Q and 206C. | Extended applicability of lower TDS/TCS certificates to Sections 194Q and 206C. | October 1, 2024 |
Conclusion
These revisions in TDS rates represent a substantial shift towards easing compliance burdens and promoting economic activity by making tax obligations more manageable. It is essential for individuals and businesses to familiarize themselves with these changes to ensure proper compliance and benefit from the reduced rates.
