Recent Changes in Tax Deductions and Collection: What Salaried Individuals Need to Know
The recent budget proposal has brought about several changes that directly impact salaried individuals in terms of tax deductions and collection. While there has been a small adjustment in tax slabs and a modest increase of Rs 25,000 in standard deduction, the general sentiment is that these changes may fall short of the expectations of salaried individuals. However, there are a few other noteworthy alterations that provide some additional benefits to taxpayers.
Lower TDS on Rent Paid
One significant change pertains to the reduction of the rate of Tax Deducted at Source (TDS) to 2 per cent from the previous 5 per cent for rents paid in excess of Rs 50,000 by an individual or Hindu Undivided Family (HUF), for a month or part thereof. This reduction is particularly beneficial for property owners renting out their property, especially senior citizens who rely on rental income. It is expected to provide them with better cash flow.
Credit for TCS of Salaried Employees
Another notable proposal is that, effective from October 1, 2024, all Tax Collected at Source (TCS) collected and other TDS deducted from the employee can be considered while deducting tax at source on salary. This change is expected to benefit the salaried class and reduce the compliance burden for many individuals.
TDS on Sale of Immovable Property
The budget has made it clear that TDS must be deducted on the price of immovable property above Rs 50 lakh, irrespective of the number of sellers or joint owners in the property. This amendment, effective from October 1, 2024, aims to close a loophole in the law that was being exploited during property transactions.
TCS Credit for Minor Child
Effective January 1, 2025, the recent provision allows the TCS of a minor child to be claimed by the parent if the income of the child is clubbed with the parent. This change aims to ease the burden on parents for ensuring tax compliance on behalf of minors and create more clarity around the treatment of TCS collected for minors.
These changes signify a step towards a simpler and more effective tax framework, providing relief and benefits for different segments of taxpayers. It is essential for salaried individuals to stay informed about these developments and consider their potential impact on their financial planning and tax obligations.
