Finance Minister Nirmala Sitharaman has announced changes to the Tax Deducted at Source (TDS) framework, which will impact salaried individuals and various financial transactions. The tweaks aim to simplify tax processes and potentially increase disposable income for some. These changes will come into effect on October 1, 2024.
One significant change affects TDS on salary income. Currently, Section 192 of the Income Tax Act covers TDS on salaries. However, the Finance Bill proposes amendments that will incorporate all TCS paid and TDS deducted under other sections into the TDS calculation for salary income. This means that salaried employees could potentially see more money in their pockets.
Another change concerns TDS on property sales. Previously, TDS was levied on the sale consideration of immovable properties other than agricultural land, with an unclear exemption for cases involving multiple buyers or sellers when the sale value or stamp duty exceeded Rs 50 lakh. The Finance Bill clarifies this exemption, stating that it applies only when the total sale value is less than Rs 50 lakh and there are multiple buyers or sellers.
Furthermore, the Finance Bill reduces the TDS rate for rental payments. Currently, individuals or Hindu undivided families paying rent exceeding Rs 50,000 per month are required to deduct TDS at 5 per cent. This rate has been reduced to 2 per cent under the new provisions.
Lastly, the Budget addresses TCS credits in the name of minors. Previously, TCS generated in a minor’s name could only be collected in that name. However, the Finance Bill enables the transfer of these credits to the parent’s tax liability, provided the minor’s income is combined with the parent’s income. This change could simplify tax management for families with minor children.
These changes to the TDS framework aim to streamline tax processes and potentially increase disposable income for certain individuals. It is advisable for individuals and businesses to stay updated on these changes and seek professional advice if necessary to ensure compliance.
