5 TDS Provision Changes Impacting Taxpayers Post-Budget 2024

Individuals who are accountable for making payments like salary, commission, interest, professional fees, rent, and other specified categories are mandated to deduct TDS (Tax Deducted at Source) before making the disbursement under the norms mentioned in the Income Tax Act. Also, it is obligatory to ensure the remittance of the TDS amount deducted to the government in the said duration.

Last Date for TDS Provisions to Become Applicable and TDS Payment

For the timely TDS amounts remittance it is important to comply within the said due dates if functioning under the norms of the TDS provisions as mentioned in the income tax act. If losses meet the said due dates then it may result in penalties or repercussions as articulated by the tax authorities.

When TDS is been deducted in June then it is important to ensure that the submitted TDS amount to the government within the 7th of July. The due date of the payment has been extended until the 30th of April for TDS deductions made in March furnishing a flexible time duration for submission.

It is critical to fulfil the payment liability within 30 days from the finish of the month in which the TDS was deducted if it is the question of TDS deductions pertinent to the rent and property purchases. Complying within these due dates ensures that you adhere to TDS provisions made by the Income Tax Act.

The same compliance shows effective financial management and also it assists in preventing any penalties or results related to non-compliance.

5 TDS Provision Modifications

We have facilitated the amendment in TDS provisions that impact the budget 2024-

Individual Salaried Can Claim TCS Credit U/S 192

Section 192 of the Act allows for the deduction of tax at the source of salary income. This means that if the assessee is a salaried employee, any other sources of income such as income from a house property or interest from a savings account, and any tax deducted on those incomes should also be taken into account when calculating the TDS deduction on the salary income.

The same Finance Bill has furnished that all TCS paid and TDS deducted under the additional sections shall be considered for the TDS deducted on the salary income via changing the current provisions. This change will allow salaried employees to receive more money upfront. For example, up until the financial year 2023-24, TCS could not be adjusted and could only be claimed as a refund when filing income tax returns for the respective assessment years. This tied up money until the refunds were paid out.

From the 1st day of October 2024, the amendments will be effective and hence could be used by the taxpayers for their advantage from the present FY 2024-25.

TDS Payment Made On Sales on Immovable Properties

Section 194-IA of the Act allows for the deduction of tax on the payment of sale consideration for immovable properties, excluding agricultural land. According to this section, when a buyer makes a payment to a resident seller for purchasing any immovable property, they must deduct an amount equal to 1% of the sum paid or the stamp duty value of the property, whichever is higher, as TDS.

This deduction should be made at the time of payment of such sum to the resident seller. This provision applies only when either the sale value of the property or the stamp duty value surpasses Rs 50 lakh.

The current rules are unclear when there are multiple buyers or sellers involved, and the sale value or stamp duty value of the property surpasses Rs 50 lakh, but no individual buyer or seller pays or receives a sum exceeding 50 lakh rupees. This leads to a potential loss of revenue for the exchequer.

Read Also: Income Tax & RBI Rules for NRIs Buying Indian Properties

This Finance Bill clarifies that the exemption applies when the total sale value is less than Rs 50 lakh. In cases where there are multiple sellers or buyers, the consideration will be the combined total of all amounts paid or payable by all the buyers to the sellers for the transfer of the immovable property.

From the 1st day of October 2024, the same amendment shall come into force.

TDS Paid on Lawer Rent

As per provisions of section 194-IB, an individual or a Hindu undivided family who pays rent of more than Rs 50,000 for a month or part of a month is needed to deduct TDS equivalent to an amount of 5 per cent of such rent paid as income-tax thereon.

The Finance Bill, 2024 has offered a reduction in the applicable TDS rate from 5% to 2%. The amendment will come into force on the 1st day of October 2024. The professionals such as Chartered Accountants (CAs), Company Secretaries (CSs), and tax experts can use and download a free Gen TDS return filing software to submit 26QB (Challan cum Statement of Deduction under section 194IA), 26QC (Challan cum Statement of Deduction under section 194IB), and 26QD (Challan cum Statement of Deduction under section 194M).

TCS Credit on Minor Income

Currently, Tax Collected at Source (TCS) that is collected in the name of a minor can only be claimed in the name of the minor. This applies even when the minor’s income is combined with that of their parents. The parent is not allowed to use the minor’s TCS credits to offset their tax liability.

The budget allows for the adjustment of TCS credits in the name of the minor with the tax liability of the parent, but this is only possible when the minor’s income is combined with that of the parent.
But if the income of the minor is nil then the budget does not verify whether the aforesaid provisions are still applicable.

Also in this concern clarity is awaited from CBDT.

The same revision will come into force from the 1st day of January 2025.

TDS Imposed on Payments Made to Partners

At present no provision is there for deduction of tax at source (TDS) on the payment of salary, remuneration, interest, bonus, or commission to partners by the partnership firm. A new TDS section has been proposed by the Finance Bill, 2024 which has the objective to draw the payments like payments to the partner of the firm under the ambit of TDS. Now TDS shall get deducted via the partnership firm in which the aggregate amounts paid to the partners via a partnership firm exceeds Rs 20,000 in a fiscal year.

10 per cent will be the applicable TDS rate

From the 1st day of April 2025 i.e., from FY 2025-26 the provisions of section 194T of the Act will come into force.