FM proposes to lessen tedium of TDS; reduces rates in many cases
By TIOL News Service
NEW DELHI, JULY 23, 2024: THERE are various provisions of Tax Deduction at Source (TDS) with different thresholds and multiple rates between 0.1%, 1%, 2%, 5%, 10%, 20%, 30% and above. To improve ease of doing business and better compliance by taxpayers, the TDS rates are proposed to be reduced. However, no change would occur with respect to sections such as TDS on salary, TDS on virtual digital assets, TDS on winnings from lottery or race horses, payment on transfer of immovable property and payments to non-residents, TDS rates for TDS on contracts etc.
Section 194D - Payment of insurance commission
As per provisions of section 194D, any person responsible for paying to a resident any income by way of remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of policies of insurance) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force which is at present 5% (in case of person other than company).
It is proposed that TDS under section 194D of the Act (in case of person other than company) be reduced from 5% to 2%.
The amendment will take effect from 1st day of April 2025.
Section 194DA - Payment in respect of life insurance policy
As per provisions of section 194DA, any person responsible for paying to a resident any sum under a life insurance policy, including the sum allocated by way of bonus on such policy, other than the amount not includible in the total income under clause (10D) of section 10, shall, at the time of payment thereof, deduct income-tax thereon at the rate of 5% on the amount of income comprised therein.
It is proposed that TDS under section 194DA of the Act be reduced from 5% to 2%.
The amendment will take effect from 1st day of October 2024.
Section 194G – Commission, etc on sale of lottery tickets
As per provisions of section 194G, any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding fifteen thousand rupees shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income- tax thereon at the rate of 5%.
It is proposed that TDS under section 194G of the Act be reduced from 5% to 2%.
The amendment will take effect from 1st day of October 2024.
Section 194H - Payment of commission or brokerage
As per provisions of section 194H, any person, not being an individual or a Hindu undivided family (as specified), who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of 5%.
It is proposed that TDS under section 194H of the Act be reduced from 5% to 2%.
The amendment will take effect from 1st day of October 2024.
Section 194-IB - Payment of rent by certain individuals or HUF
As per provisions of section 194-IB, any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to 5% of such income as income-tax thereon.
It is proposed that TDS under section 194-IB of the Act be reduced from 5% to 2%.
The amendment will take effect from 1st day of October 2024.
