Synopsis: Budget 2024 introduces significant changes to the Tax Deducted at Source (TDS) framework, impacting salaried employees, property transactions, rent payments, and more. Key highlights include allowing credit for Tax Collected at Source (TCS) against TDS, reducing TDS on rent, and new rules for partnership firms and e-commerce operators.
India’s salaried individuals have much to absorb from the recent Budget 2024, especially the changes in the Tax Deducted at Source (TDS) framework introduced by Finance Minister Nirmala Sitharaman.
These tweaks promise to impact disposable income and streamline tax processes.
One of the significant moves is the proposal allowing salaried employees to claim credit for Tax Collected at Source (TCS) against TDS deducted on salaries.
Highlighting this change in her Budget Speech, Sitharaman stated, "A beginning is being made in the Finance Bill by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions, and capital gains taxation."
This change means more immediate cash flow for employees, as previously, TCS could only be claimed as a refund upon filing income tax returns, often leading to locked-up funds until refunds were processed.
This change will take effect from October 1, 2024, benefiting taxpayers from FY 2024-25 onwards.
Changes to Section 194-IA are also noteworthy.
This section mandates a 1% TDS on payments for the sale of immovable property exceeding ₹50 lakh.
The new budget clarifies that this threshold applies collectively in transactions involving multiple buyers or sellers.
This amendment ensures no ambiguity and prevents potential revenue loss, coming into effect on October 1, 2024.
In another beneficial tweak, the TDS on rent payments has been reduced. Currently, individuals or Hindu undivided families paying over ₹50,000 in rent per month must deduct 5% as TDS.
The Finance Bill, 2024 proposes lowering this rate to 2%, effective from October 1, 2024. This reduction will ease the financial burden on tenants, particularly in high-rent areas.
For families, there’s a positive change concerning TCS credits in a minor's name.
Previously, these credits could only be claimed by the minor, even if their income was clubbed with that of their parents.
The budget now allows parents to adjust TCS credits against their tax liability when the minor’s income is clubbed with theirs.
However, it remains unclear if this applies when the minor’s income is nil, pending further clarification from the CBDT.
This provision will be effective from January 1, 2025.
Additionally, the budget introduces a new TDS section impacting partnership firms.
Currently, there’s no TDS on payments such as salary, remuneration, interest, bonus, or commission to partners.
From April 1, 2025, payments exceeding ₹20,000 annually to partners will attract a 10% TDS.
This new rule under Section 194T aims to bring these transactions into the TDS fold from FY 2025-26.
In a significant change for e-commerce operators, the TDS rate has been reduced from 1% to 0.1%.
This reduction aims to ease the burden on digital marketplaces and streamline their operations.
Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as professional financial or tax advice. Always consult with a qualified financial advisor or tax professional before making any financial decisions based on the content of this article.
