TDS PROVISIONS POST BUDGET -2024

PROPOSED RATE OF TDS ON RENT PAID

As per provisions of section 194-IB, an individual or a Hindu undivided family who pays rent exceeding Rs.50,000 for a month or part of a month toward house property is required to deduct TDS @ 5 per cent on rent paid to the landlord during a financial year.

It has been proposed by the Finance Minister to reduce rate of TDS from 5% to 2% w.e.f. 01.10.2024

PROPOSED TCS CREDIT TOWARD TAX LIABILITY- SALARIED EMPLOYEE

The Finance Minister has proposed that all TCS collected and TDS deducted under all other sections of Income Tax Act is to be considered for TDS deducted  while calculating net tax liability of salary class  assessee by amending the existing provisions. Uptill now, TCS could not be adjusted against tax liability of an assessee. It can only be claimed while filing income tax return for the respective assessment year. This will give extra take home salary  to the assessee.

The proposed amendment, if approved by the Parliament, will be effective from the 01.10.2024 and the assessee can utilise  TCS credit for current financial year  2024-25.

PROPOSED CLAIM OF TCS OF MINOR BY THE PARENTS

The Finance Minister has proposed for the adjustment of TCS credits in the name of the minor with the tax liability of the parent in whose and income of the minor is clubbed.

At present, TCS collected at the instance of minor can only be claimed in the name of the minor by way of filing ITR. It cannot be adjusted against the tax liability  of the parent, inspite of  income being clubbed in their hand.

This is the case, even when the income of the minor is clubbed with that of their parents. The parent cannot utilise the minor’s TCS credits against his/ her own tax liability.

The proposed amendment, if approved by the Parliament, will be effective from the 01.01.2025.

PROPOSED TDS ON PAYMENT TO PARTNERS

The Finance Minister has proposed a new TDS section i.e.  194T whereby all payments to the partner of the firm such as salary, remuneration, bonus, or commission to partners by the partnership firm under the purview of TDS. Hence, where aggregate amounts paid to a partner by a partnership firm is more than ₹20,000 in a financial year, TDS will be deducted by the partnership firm @ 10%.

The provisions of section 194T of the Act will take effect from the 1st day of April, 2025.

PROPOSED CLARIFICATION ON TDS ON SALE OF IMMOVABLE PROPERTY COMPRISING MULTIPLE TRANSACTIONS

Section 194-IA of the Act provides for deduction of tax at source @ 1%  on payment of sale consideration by the buyer to the seller for the sale of immovable properties other than agricultural land. The section further provides that TDS will be deducted on the sum paid by the buyer to the seller or the stamp duty value of such property, whichever is higher  at the time of payment of sale consideration.

However, no TDS is required to be deducted u/s 194-IA of the Act is the sale consideration or stamp value is less than ₹50 lakh. It has been clarified in the Finance Bill that the exemption is only when the total sale value is less than ₹50 lakh and there is one buyer and seller and where there is more than one seller or buyer, then such consideration shall be the aggregate of all the amounts paid or payable by all the buyer(s) to the seller(s), for transfer of such immovable property.

The present provisions of the Act are not clear in the case of multiple buyers or sellers, where the sale value of the immovable property or stamp duty value exceeds ₹50 lakh, but no buyer or seller pays or receives a sum exceeding ₹50 lakh rupees. This results in loss to the Income Tax Department which has been prevented by such amendment will take effect from the 1st day of October, 2024, if the Finance Bill is approved by the Parliament without any modification.

Conclusion

The recent budget announcements have introduced significant changes to TDS provisions in India. These amendments impact individuals, businesses, and partnerships in various ways. Understanding these changes is crucial for ensuring compliance and maximizing tax savings.

PKPConsult, your trusted partner in tax compliance in India and GST filing in India, is here to guide you through these complexities. Our team of experts can help you navigate the new TDS landscape, ensuring you are compliant with the latest regulations and optimizing your tax position.

Don't let the new TDS rules overwhelm you. Contact PKPConsult today for a comprehensive consultation and let us handle the complexities while you focus on growing your business.