Slaraied can claim credit for TCS collected
Section 192 of the Act provides for deduction of tax at source on salary income. Under this section, where the taxpayer is a salaried employee, other avenues of income like income from house property, interest from savings account etc. and tax, if any, deducted thereon should also be considered when making the TDS deduction on the salary income.
This Finance Bill has provided that all TCS paid and TDS deducted under all other sections to also be considered for TDS deducted on salary income by amending the existing provisions. This will help put more money upfront in the hands of salaried employees. Until FY 2023-24 for instance, TCS could not be adjusted and the same can only be claimed as refund on filing income tax returns for the respective assessment years. This was locking up money until the refunds were paid out.
The amendments will take effect from the 1st day of October, 2024 and thus can be utilised by the taxpayers for their benefit from the current FY 2024-25.
TDS on sale of jointly held property
Section 194-IA of the Act provides for deduction of tax on payment of sale consideration for the sale of immovable properties other than agricultural land. This section provides that, a buyer while making payment to a resident seller for purchasing any immovable property is required to deduct an amount equal to 1 per cent of the sum paid or the stamp duty value of such property, whichever is higher, as TDS thereon, at the time of payment of such sum to the resident seller. The above is applicable only when either the sale value of the immovable property or the stamp duty value of such property, exceeds ₹50 lakh.
The present provisions are ambiguous in the case of multiple buyers or sellers, where the sale value of the immovable property or stamp duty value exceeds ₹50 lakh, but no buyer or seller pays or receives a sum exceeding 50 lakh rupees. This results in loss of potential revenue for the exchequer.
This Finance Bill has clarified that the exemption is only when the total sale value is less than ₹50 lakh and where there is more than one seller or buyer, then such consideration shall be the aggregate of all the amounts paid or payable by all the buyer(s) to the seller(s), for transfer of such immovable property.
This amendment will take effect from the 1st day of October, 2024.
Lower TDS on rent paid
As per provisions of section 194-IB, an individual or a Hindu undivided family who pays rent exceeding ₹50,000 for a month or part of a month is required to deduct TDS equivalent to an amount of 5 per cent of such rent paid as income-tax thereon.
The Finance Bill, 2024 has proposed for reduction in the applicable rate of TDS from 5 per cent to 2 per cent.
The amendment will take effect from the 1st day of October 2024.
TCS of minor can be claimed by the parent
At present, TCS collected in the name of a minor can only be claimed in the name of the minor. This is the case, even when the income of the minor is clubbed with that of their parents. The parent cannot utilise the minor’s TCS credits against his/ her own tax liability.
The Budget has provided for the adjustment of TCS credits in the name of the minor with the tax liability of the parent. However, there is a catch. This can be done only when the income of the minor is clubbed in the hands of the parent.
However, in cases where minor’s income is nil, the budget does not confirm whether the above provision still applies.
Further clarity is awaited from CBDT in this regard.
The amendment will take effect from the 1st day of January, 2025.
TDS imposed on payment to partners
Presently, there is no provision for deduction of tax at source (TDS) on payment of salary, remuneration, interest, bonus, or commission to partners by the partnership firm. The Finance Bill, 2024, has proposed a new TDS section which is aimed at bringing payments such payments to the partner of the firm under the purview of TDS. Now, where aggregate amounts paid to partners by a partnership firm is more than ₹20,000 in a financial year, TDS will be deducted by the partnership firm.
Applicable TDS rate will be 10 per cent.
The provisions of section 194T of the Act will take effect from the 1st day of April, 2025 ie, from FY 2025-26.