Budget 2024: Nirmala Sitharaman announces 10 Key things to look out for in TCS, TDS norms

Union Budget 2024: India's Finance Minister Nirmala Sitharaman announced the simplification of taxation rules through the Tax Deducted at Source (TDS) rate structure in the Budget 2024 announcement.

The TDS rates under the payment in respect of life insurance policy, payment of insurance commission, commission etc on sale of lottery tickets, payment of commission or brokerages, payment of rent by individual or Hindu undivided family (HUF), payment of certain sums by certain individuals or HUF, payment of certain sums by e-commerce operator to e-commerce participants, are proposed to be reduced to 2 per cent from 5 per cent.

10 Key things to look out for:

1. The government of India is to merge the two current tax exemption regimes into one regime.
2. The 5 per cent TDS payment rate will be merged with the 2 per cent TDS rate. The government has proposed to bring down the TDS rates from 5 per cent to 2 per cent in certain sections.
3. The 20 per cent TDS rate on repurchasing units through mutual funds or Unit Trust of India (UTI) is now being withdrawn.
4. The TDS rate on e-commerce operators is reduced by 90 basis points to 0.1 per cent from 1 per cent.
5. The credit given on tax collected at source (TCS) proposed to be given in the TDS, will now be deducted on salary.
6. The Finance Minister proposed to decriminalize the delays for payment of TDS up to the due date of statement filling.
7. The government also plans to issue a standard operating procedure (SOP) for the TDS defaults and take steps to simplify and rationalise the compounding guidelines, in case of such a default.
8. The government is in the process of rolling out an amendment to Section 39, which mandates the return filing by TDS deductors every month.
9. This mandate to file TDS returns will be compulsory even if no detection is made during the month.
10. This move will provide an enabling clause for prescribing the time limit for filing such returns.

“The withdrawal of the 20% TDS rate on mutual fund unit repurchase marks a step towards easing the tax burden for investors. This aligns with the overall budget's focus on inclusive growth, employment generation, and infrastructure development, aimed at creating ample opportunities and fostering a resilient economy,” said Feroze Azeez, Deputy CEO of Anand Rathi Wealth Limited.