Income tax news: New TDS rates effective October 1 – What will change for taxpayers | Mint
Source: Live Mint
Union Finance Minister Nirmala Sitharaman announced income tax changes in the Union Budget 2024, with certain updates scheduled to take effect from October 1. These crucial proposals, approved in the Finance Bill, include revised TDS rates that will be implemented on that date.
What is Tax Deducted at Source (TDS)?
TDS is the method of collecting tax directly from the source of income. This applies to various income types, including salary, interest, commission, rent, brokerage, professional fees, and royalties.
The tax department deducts TDS at the specified rate when the recipient provides their Permanent Account Number (PAN). If the PAN is not provided, TDS is deducted at 20%.
According to Deloitte’s official website, new TDS rates on these transactions will apply from 1 October.
- The TDS burden on salaried employees will be reduced by including TCS credits and TDS credits when calculating TDS on salary.
- TDS Removal: The government has abolished the 20% TDS on mutual fund unit repurchases to lessen the tax burden on taxpayers.
- Buyback Proceeds Taxation: Proceeds from share buybacks will now be considered dividend income, taxed according to the shareholder’s personal income tax slab.
“To reduce the tax burden on taxpayers, the government has removed the 20% TDS on mutual fund unit repurchases. Additionally, proceeds from share buybacks will be treated as dividend income and taxed based on the shareholder’s personal income tax slab. October 1 also marks the start of the Vivad Se Vishwas scheme, which aims to settle pending disputes by reducing the outstanding tax amount,” said Abhishek Soni, CEO and Co-founder of Tax2win.
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