The recent amendments propose several changes to the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions under the Income Tax Act. Here’s a detailed overview of the relevant modifications.
Changes in TDS Rates
Section 194LBC
The TDS rate on income payable by a securitisation trust to a resident investor is proposed to be reduced from 25%/30% to 10%.
Proposed Threshold Limits
The following threshold limits are proposed to be increased across various sections:
| Section | Nature of Income | Current Threshold | Proposed Threshold |
|---|---|---|---|
| 193 | Interest on securities | Nil | Rs 10,000 |
| 194 | Interest payable to resident individuals/HUF on debentures by a public company | Rs. 5,000 | Rs. 10,000 for individual shareholders |
| 194 | Dividend | Rs. 5,000 for individual shareholders | Rs. 10,000 |
| 194A | Interest other than interest on securities | Rs. 10,000 | Rs. 1,00,000 for senior citizens, Rs. 50,000 for others if payer is a bank, cooperative society, and post office |
| 1948 | Winnings from lotteries, crossword puzzles, gambling, betting, etc. | Rs. 50,000 for senior citizens, Rs. 40,000 for others (if payer is a bank, cooperative society, post office) | Rs. 10,000 in respect of a single transaction |
| 1948 | Winnings from horse races | Aggregate of amounts exceeding Rs. 10,000 during the financial year | Rs. 10,000 in respect of a single transaction |
| 194D | Insurance commission | Rs. 15,000 | Rs. 10,000 in respect of a single transaction, Rs. 20,000 |
| 1940 | Commission and other payments on sale of lottery tickets | Rs. 15,000 | Rs. 20,000 |
| 194H | Commission and brokerage | Rs. 15,000 | Rs. 20,000 |
| 194I | Rent | Rs. 2,40,000 during the financial year | Rs. 50,000 per month or part of a month |
| 1943 | Royalty and fees for professional or technical services | Rs. 30,000 | Rs. 50,000 |
| 194K | Income in respect of units of mutual funds | Rs. 5,000 | Rs. 10,000 |
| 194LA | Compensation for compulsory acquisition of immovable property (other than agriculture land) | Rs. 2,50,000 | Rs. 5,00,000 |
TCS Provisions
The TCS provisions under Section 206C[TH] concerning the sale of goods are proposed to be withdrawn with effect from 01-04-2025. Additionally, changes are proposed in Section 1940 to remove the reference to Section 206C(1H).
Furthermore, Section 2064B, which mandates the deduction of tax at higher rates if the payee fails to furnish his return of income for a specified period, is proposed to be omitted. Correspondingly, its reference in Section 1945 is also slated for omission. Similarly, Section 206CCA, which provides for the collection of tax at higher rates under the same circumstances, is proposed to be omitted.
Definition of ‘Forest Produce’
A definition for ‘Forest Produce’ will be introduced under Section 206C(1), aligning it with the meaning defined in any State Act or under the Indian Forest Act of 1927. Amendments to Section 206C(1) propose that only specific forest produce obtained under forest leases will be subject to TCS.
The TCS rate for timber or other forest produce (excluding tendu leaves) obtained under a forest lease is proposed to be reduced from 2.5% to 2%.
Remittance and TCS Collection
The threshold limit under Section 206C(IG) for TCS collection by authorized dealers from remittances made under the Liberalised Remittance Scheme (LRS) and sellers of overseas tour packages is proposed to be increased from Rs 7 lakhs to Rs. 10 lakhs. Additionally, authorized dealers will not collect TCS under Section 206C(IC) on foreign currency remittances from education loans under Section 80E(3)(b).
These amendments aim to streamline tax processes and provide clearer guidelines for taxpayers and financial entities alike.