Quick Summary
There are various provisions of Tax Deduction at Source (TDS) with differentthresholds and multiple rates between 0.1%, 1%, 2%, 5%, 10%, 20%, 30% andabove. To improve ease of doing business and better compliance by taxpayers, theTDS rates are proposed to be reduced. However, no change would occur wi
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FAQ :
The main goal is to improve ease of doing business and enhance tax compliance for taxpayers by simplifying the various TDS thresholds and rates.
Proposed reductions include TDS on insurance commission (Section 194D) from 5% to 2%, life insurance policy payments (Section 194DA) from 5% to 2%, lottery ticket commissions (Section 194G) from 5% to 2%, commission or brokerage (Section 194H) from 5% to 2%, rent payments (Section 194-IB) from 5% to 2%, and payments for work contracts by individuals (Section 194M) from 5% to 2%.
Yes, TDS on salary, TDS on virtual digital assets, TDS on winnings from lottery etc./race horses, payments on transfer of immovable property, and payments to non-residents will not see changes in their TDS rates.
Most of the proposed TDS rate changes will take effect from 1st October 2024. However, the reduction in TDS for insurance commission (Section 194D) will take effect from 1st April 2025.
The TDS rate under Section 194-O for e-commerce operators facilitating sales or services for e-commerce participants is proposed to be reduced from 1% to 0.1% to align with other provisions.
Yes, Section 194F, which deals with TDS on payments on repurchase of units by Mutual Funds or UTIs and currently has a 20% TDS rate, is proposed to be omitted.
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