New Tax Deducted at Source (TDS) Rules Effective from October 1, 2024: Complete List
1. Section 194D: Payment on Insurance Commission (for persons other than companies)
Existing Provision: Entities making payments to resident individuals as remuneration or rewards in the form of commission for soliciting or obtaining insurance business (including activities related to the continuance, renewal, or revival of insurance policies) are required to deduct TDS at a rate of 5% at the time of credit or payment, whichever occurs first.
Amended Provision: The TDS rate for persons other than companies will be reduced to 2% from the existing 5%, effective from April 1, 2025.
2. Section 194DA: Payments Related to Life Insurance Policies
Existing Provision: Any individual responsible for making payments to a resident relating to a life insurance policy, including bonus allocations (excluding amounts not included in total income under section 10(10D)), must deduct income tax at a rate of 5% on the income portion.
Amended Provision: The TDS rate on these payouts will be reduced to 2% from the previous rate of 5%, starting October 1, 2024.
3. Section 194F: TDS on Repurchase of Units by Mutual Funds or UTI
Existing Provision: Individuals responsible for paying amounts under subsection (2) of section 80CCB must deduct income tax at a rate of 20% at the time of payment.
Amended Provision: This section will be abolished and will no longer be applicable as of October 1, 2024.
4. Section 194G: Commission on Lottery Ticket Sales
Existing Provision: Entities making payments in the form of commission or rewards for stocking, distributing, purchasing, or selling lottery tickets are required to deduct TDS at a rate of 5% at the time of credit to the payee’s account or at the time of payment, whichever is earlier.
Amended Provision: The TDS rate will be reduced to 2%, effective October 1, 2024.
5. Section 194H: Commission and Brokerage Payments
Existing Provision: Any entity (excluding individuals or Hindu undivided families) responsible for paying residents any income by way of commission (not including insurance commission under section 194D) or brokerage must deduct tax at 5%.
Amended Provision: The TDS rate has been lowered to 2% effective October 1, 2024.
6. Section 194IB: TDS on Rent Payments
Existing Provision: Individuals or Hindu undivided families (not covered under section 194I) making payments to residents for rent exceeding ₹50,000 in a month or part thereof must deduct income tax at a rate of 5%.
Amended Provision: The TDS rate will be reduced to 2% from October 1, 2024.
7. Section 194IA: TDS on Purchase of Immovable Property (Clarification)
Existing Provision: Individuals responsible for paying any sum as consideration for the transfer of immovable property (excluding agricultural land) valued at ₹50 lakhs or more must deduct TDS at 1% of the payment or the stamp duty value, whichever is higher.
Amended Provision: A clarification has been issued establishing that if the property is valued at ₹50 lakhs or more and is split among multiple buyers and/or sellers, TDS will apply regardless of the payment method. This will take effect from October 1, 2024, and pertains to the total aggregate consideration for the property.
8. Section 194M: Certain Payments by Individuals or HUFs
Existing Provision: Individuals or Hindu undivided families (excluding those required to deduct tax under sections 194C, 194H, or 194J) responsible for making any payments to residents must deduct TDS at a rate of 5% when the sum exceeds ₹50 lakhs in a year.
Amended Provision: The TDS rate on such payments will be reduced to 2%, effective October 1, 2024.
9. Section 194O: TDS on E-commerce Operators
Existing Provision: E-commerce operators facilitating the sale of goods or services from participants through any digital platform must deduct TDS at a rate of 1% on the gross amount at the time of credit or payment, whichever occurs first.
Amended Provision: The TDS rate for e-commerce operators will be lowered to 0.1% from 1%, effective October 1, 2024.
10. Extending the Scope of Lower TDS/TCS Applicability on Purchase of Goods
The provision for obtaining a certificate under Section 197 for lower TDS/TCS was previously not applicable for Sections 194Q (TDS on payments for the purchase of goods) and 206C (TCS on receipts from the sale of goods). This benefit has now been extended to both sections, effective October 1, 2024.