With the approaching Union Budget 2025-26 the discussions strengthen on easing the tax system of India.
Recommendations have been shared with Finance Minister Nirmala Sitharaman, from the Industry bodies, including the Federation of Indian Chambers of Commerce and Industry (FICCI), advocating tax reforms to augment the ease of doing business and diminish complexity.
Facilitating the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) regimes are among the major proposals to furnish relief before businesses and taxpayers alike.
Easing the TDS-TCS Rates
FICCI has asked to lessen the distinct TDS/TCS rates to an easier two- or three-tier system, a move anticipated to reduce the confusion and issues towards the tax classifications.
The same shall too rectify the compliance and lessen the administrative loads. As per the survey from Deloitte, it is discovered that robust support amongst taxpayers for easier Individual Tax Returns (ITRs), straightforward incentive calculations, and a unified TDS framework based on a “one rate, one section” principle.
Also, the survey of the income-tax policy recommended eliminating Form 16A, as TDS details are available in receivers Form 26AS and Annual Information Statements (AIS). These actions can facilitate compliance and ease the process for businesses and individuals.
TDS-TCS Reforms to Date
Certain steps in Budget 2024 were opted to ease the tax structure. The TDS rate concerning rents surpassing Rs 50,000 was been lessened to 2% from 5% and the property buyers of more than Rs 50 lakh were mandated to deduct the TDS merely on the amount surpassing the limit irrespective of the engaged number of sellers.
Recent amendments permit the parents to claim the TCS collected via an income from a minor child making the method family-friendly.
Employers from October 2024 will be mandated to factor in TDS/TCS deducted on non-salary income on the computation of tax deductions on salaries, reducing double taxation. TDS software updates, implemented in December 2024, now ensure precise TDS calculations for Q4 of FY 2024-25.
Efforts for the Confidence of Taxpayers
Along with the 2025 budget, the stakeholders are anticipated for effective reforms to ease the tax regime subsequently. Facilitating the TDS-TCS procedure can improve compliance, facilitate financial stress, and encourage confidence amongst taxpayers, making the way for a more appropriate and efficient system.
