TDS threshold hiked to Rs 2 lakh for compensation amount paid for compulsory acquisition of land

By TIOL News Service

NEW DELHI, MAR 18, 2012: THE TDS accounts for about 47% of corporate tax revenue, and there is almost unanimity among the experts that India needs to garner more revenue through the TDS route. In this background, the Budget 2012 has proposed many significant changes in the TDS provisions which may even impact the way certain businesses are done in the market. One of the changes to levy 1% TDS on property consideration exceeding Rs 50 lakh may result in generation of black money, it is feared.

The details of the changes proposed are as follows:

1. TDS on transfer of immovable property - Tax Deduction at Source (TDS) @ 1% on transfer of certain immovable properties (other than agricultural land) in case the consideration received on such sale exceeds specified threshold limit

2. TDS on remuneration to a director – Remuneration paid to the directors of the company, which are not in the nature of salary, to attract TDS @ 10%.

3. TDS on income credit by VCF/VCC - The exemption from applicability of TDS provisions on income credited or paid by VCF/ VCC to investors shall be withdrawn.

4. TDS on interest on debentures - Threshold limit to withhold tax on interest on debentures increased to Rs. 5,000 from existing Rs. 2,500. The limit would also apply to unlisted debentures.

5. TDS on compensation for compulsory acquisition - Threshold for TDS on compensation or consideration for compulsory acquisition to be increased from Rs.1 lakh to Rs.2 lakhs.