Important proposals of the Union Budget 2024 have been approved by the Finance Bill and the changes will come into effect from October 1, 2024, including the revised Tax Deducted at Source (TDS) rates.
Revised TDS rates and tax changes effective from October 1, 2024
For the uninitiated, TDS is a concept that was introduced as a form of tax collectionIn which tax is deducted at the source of income. The deductor making the specific payment is required to deduct TDS and send it to the Central Government. The deductor can claim credit for this deducted amount through Form 26AS or TDS certificate.
Notably, as per reports, the new TDS rate changes will be implemented from October 1, 2024:
- For those TDS transactions which fall under sections 19DA, 194H, 194-IB and 194M, the rate will be reduced from 5% to 2%.
- TDS rate for e-commerce operators will be reduced from 1% to 0.1%.
- Under Section 194DA applicable to life insurance payments, the rate will be reduced from 5% to 2%.
- TDS rate under section 194G will be reduced from 5% to 2%. This section covers commissions on lottery ticket sales.
- For rental payments under section 194-IB, the TDS rate will also be reduced from 5% to 2%.
- Section 194M, relating to payments by certain individuals or Hindu undivided families (HUFs), will see its TDS rate reduced from 5% to 2%.
- TDS rate under section 194-O for payments by e-commerce operators will be reduced from 1% to 0.1%.
- Section 194F, which deals with mutual fund unit repurchase, is proposed to be deleted.
New tax rules from budget 2024
Additionally, Budget 2024 introduces 10% TDS on specified central and state government bonds, with a limit of Rs 10,000 for exemption.
There will also be a shareholder-level tax on share buybacks from October 1 and the Securities Transaction Tax (STT) on futures and options will increase by 0.02% and 0.1% respectively. Finally, Section 194-IA mandates 1% TDS on sale of property worth more than Rs 50 lakh, which applies collectively on transactions involving multiple parties. These amendments will be effective from October 1, 2024.
Summary:
Important tax changes effective from October 1, 2024, including revised Tax Deducted at Source (TDS) rates, have been approved by the Union Budget 2024. Key updates include a cut from 5% to 2% for various transactions and a reduction for e-commerce operators. , Additionally, a new 10% TDS is applicable on certain government bonds, while share buybacks and asset sales will attract additional tax.
