RATIONALIZATION OF TAX DEDUCTION AT SOURCE (TDS) PROVISIONS

RATIONALIZATION OF TAX DEDUCTION AT SOURCE (TDS) PROVISIONS

The provision of withholding requires every person who is responsible for payment of anyspecified sum to any person shall deduct tax at source at the prescribed rate and deposit it with the Central Government within specified time if the sum exceeds the prescribed amount.

In order to rationalise the rates and base for TDS provisions, the existing threshold limit for deduction of tax at source and the rates of deduction of tax at source are proposed to be revised as mentioned in following tables respectively

INCREASE IN THRESHOLD LIMIT OF DEDUCTION OF TAX AT SOURCE ON VARIOUS PAYMENTS MENTIONED IN THE RELEVANT SECTIONS OF THE ACT

Present Section

Heads Existing Threshold Limit (Rs.)

Proposed Threshold Limit(Rs.)

192A Payment of accumulated balance due to an employee 30,000 50,000
194BB Winnings from Horse Race 5,000 10,000
194C Payments to Contractors Aggregate annual limit of 75,000 Aggregate annual limit of 1,00,000
194LA Payment of Compensation on acquisition of certain Immovable Property 2,00,000 2,50,000
194D Insurance commission 20,000 15,000
194G Commission on sale of lottery tickets 1,000 15,000
194H Commission or brokerage 5,000 15,000

 

REVISION IN RATES OF DEDUCTION OF TAX AT SOURCE ON VARIOUS PAYMENTS MENTIONED IN THE RELEVANT SECTIONS OF THE ACT:

Present Section

Heads Existing Rate of TDS (%)

Proposed Rate of TDS (%)

 

194DA

Payment in respect of Life Insurance Policy 2% 1%
 

194EE

Payments in respect of NSS Deposits 20% 10%
 

194D

Insurance commission Rate in force

(10%)

5%
 

194G

Commission on sale of lottery tickets 10% 5%
194H Commission or brokerage 10% 5%

CERTAIN NON-OPERATIONAL PROVISIONS TO BE OMITTED, WHICH ARE AS FOLLOWS:

Present Section Heads Proposal
194K Income in respect of Units To be omitted w.e.f 01.06.2016
194L Payment of Compensation on acquisition of Capital Asset To be omitted w.e.f 01.06.2016

These amendments will take effect from 1st June, 2016.

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