Overview

The Tax Deducted at Source (TDS) rules have undergone a number of modifications in the Union Budget 2024, which will have a big effect on both individuals and enterprises. We'll talk about the five most important TDS provision modifications in this blog post.

1. Salaried Individuals May Request Credit for TCS Accumulated

The Act's Section 192 allows for the deduction of taxes on pay income at the source. When calculating the TDS deduction on salary income under this section, taxpayers who are salaried employees must additionally take into account additional sources of income, such as interest from savings accounts, income from real estate, and any taxes that may have been withheld.

By altering the current regulations, the Finance Bill stipulates that all TCS paid and TDS deducted under all other sections will also be taken into account for TDS deducted on pay income. This will assist in giving salaried staff more money up front. For example, TCS was not adjustable until FY 2023–2024 and could only be refunded when filing income tax returns for the corresponding assessment years. This involved retaining money until the reimbursements were issued.

The revisions can be used by taxpayers for their benefit starting with the current fiscal year 2024–2025 as they will become effective on October 1st, 2024.

2. TDS While Selling Jointly Owned Real Estate

Section 194-IA: According to this clause, a 1% TDS must be deducted on any proceeds from the sale of real estate that is valued at more than Rs 50 lakh. The new budget makes it clear that this regulation applies collectively in transactions involving many buyers or sellers. The changes will become operative on October 1, 2024.

3. Variations in TDS Rate

Lower TDS rates on certain payments were implemented in Budget 2024 in an effort to boost taxpayer compliance and ease business operations. The specified payments are displayed in the table below:

4. TDS Levied on Partner Payments

As of right now, the partnership business is not allowed to deduct tax at source (TDS) from the salary, compensation, interest, bonus, or commission that it pays to partners. A new TDS section has been proposed in the Finance Bill, 2024, with the intention of bringing payments made to the firm's partner under the TDS jurisdiction. TDS will now be withheld by the partnership firm in cases where the total amount paid to partners by the firm exceeds ₹20,000 within a fiscal year.

The applicable TDS rate is going to be 10%.

Section 194T of the Act will go into effect on April 1, 2025, which is the first day of the fiscal year 2025–2026.

5. The Parent May Claim the Minor's TCS

TCS gathered in a minor's name is currently limited to claims made in the minor's name. This remains true even in situations where the minor's income is combined with their parents'. The parent is unable to deduct the minor's TCS credits from their own tax obligations.

The minor's TCS credits may be adjusted in accordance with the parent's tax liability, according to the budget. There is a catch, though. This is only possible if the parent has joint custody of the minor's income.

The budget, however, does not specify whether the aforementioned clause still holds true in situations where the minor's income is zero.

In this regard, more clarification from CBDT is anticipated.

The modification will go into effect on January 1st, 2025.

In Summary

For both individuals and enterprises, the TDS provisions amendments included in the Union Budget 2024 would have a big effect. To guarantee adherence to tax regulations and reduce tax obligations, it is imperative to comprehend these modifications and make appropriate plans in advance.

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