How Budget 2024 Impacted TDS Rates and Compliance?

Tax Deducted at Source (TDS)

represents a tax collection method where tax is withheld from various income categories such as salaries, rental income, sales of assets, and dividends. This responsibility falls on the payer to deduct and submit the tax to the government on behalf of the recipient.

Budget 2024 Updates

The 2024 Budget introduced reduced TDS rates for specific transactions to streamline business processes and enhance tax compliance. Notable changes include:

• Section 194D: TDS on insurance commission payments to non-corporate entities lowered from 5% to 2%, starting April 1, 2025.
• Section 194DA: Life insurance payouts TDS decreased from 5% to 2%, effective October 1, 2024.
• Section 194G: TDS on commissions from the sale of lottery tickets reduced from 5% to 2%, effective October 1, 2024.
• Section 194H: TDS on brokerage or commission diminished from 5% to 2%, starting October 1, 2024.
• Section 194-IB: TDS on rent paid by certain individuals or HUFs decreased from 5% to 2%, effective October 1, 2024.
• Section 194M: TDS on specific payments by individuals or HUFs cut from 5% to 2%, from October 1, 2024.
• Section 194-O: TDS on payments by e-commerce operators to participants reduced from 1% to 0.1%, effective from October 1, 2024.
• Section 194F: Removal proposed for mutual fund or UTI repurchase TDS, effective October 1, 2024.

TDS Rates in India

Here's an overview of TDS rates for both resident and non-resident transactions, including domestic and international firms for the fiscal years 2023-24 and 2024-25:

• Section 192: Salary-related TDS is as per regular income slabs influenced by the employee’s exemption level.
• Section 192A: Pre-mature EPF withdrawals exceeding Rs. 50,000 incur a 10% TDS.
• Section 193: TDS on securities interest varies; a 10% TDS applies for debentures up to Rs. 5,000 and particular savings bonds up to Rs. 10,000.
• Section 194: Dividends over Rs. 5,000 are subject to a 10% TDS.
• Section 194A: Non-securities interest has a 10% TDS rate; limits are Rs. 50,000 for seniors, Rs. 40,000 for others.
• Section 194B: Lottery gains exceeding Rs. 10,000 face 30% TDS.
• Section 194BA: Earnings from online games encounter a 30% TDS.
• Section 194BB: Horse race winnings above Rs. 10,000 incur 30% TDS.
• Section 194C: Contracts have 1% or 2% TDS, based on payee status.
• Section 194D: TDS rates differ for insurance commission payments contingent on company type.
• Section 194DA: Insurance payouts exceeding Rs. 1,00,000 entail a 5% TDS.
• Section 194E: TDS for non-resident sports figures and associations is 20%.
• Section 194EE: National Savings Scheme disbursements over Rs. 2,500 face a 10% TDS.
• Section 194F: UTI or mutual fund units' repurchase draws a 20% TDS.
• Section 194G: Lottery ticket sales above Rs. 15,000 attract a 5% TDS.
• Section 194H: Commissions above Rs. 15,000 face a 5% TDS.
• Section 194-I: Rent for equipment above Rs. 2,40,000 involves a 2% TDS; other properties have a 10% TDS.
• Section 194-IA: Property transfers over Rs. 50,00,000 incur a 1% TDS.
• Section 194-IB: Monthly rents over Rs. 50,000 by individuals or HUFs face a 5% TDS.
• Section 194-IC: Joint Development Agreements payments encounter a 10% TDS.
• Section 194J: Payments for professionals and technical services over Rs. 30,000 are subject to a 10% or 2% TDS.
• Section 194K: Income from mutual funds has a 10% TDS.
• Section 194LA: Compensation for the acquisition of immovable property beyond Rs. 2,50,000 involves a 10% TDS.
• Section 194LB: Interest from infrastructure debt funds to non-residents encounters a 5% TDS.
• Section 194LC: Foreign currency loan interest from Indian firms involves a 5% or 4% TDS.