Budget 2024: Finance Minister Announces TDS Framework Changes—Check How It Affects You

New Delhi: Finance Minister Nirmala Sitharaman has announced changes to the Tax Deducted at Source (TDS) framework which will affect salaried individuals. The changes will affect disposable income and make tax processes smoother. The Finance Minister explained that the Finance Bill aims to simplify the tax system for charities, adjust TDS rates, improve reassessment and search provisions and revise capital gains taxation.

Section 192 of the Act deals with tax deduction at source (TDS) on salary earnings. Nirmala Sitharaman announced that starting October 1, 2024, TDS deductions for salary earnings will be simplified which will allow all TCS and TDS deducted under various sections to be considered. This change aims to put more cash in the hands of salaried individuals.

Previously, tax was deducted on the sale of immovable properties except for agricultural land if the sale value exceeded Rs 50 lakh. However, the rules were unclear when there were multiple buyers or sellers. The new Finance Bill clarifies that the exemption applies only when the total sale value is less than Rs 50 lakh even if there are multiple sellers or buyers.

Lower TDS on Rent Payments

Currently, individuals or Hindu undivided families who pay rent over Rs 50,000 per month must deduct TDS at 5 per cent. The new Finance Bill proposes to reduce this TDS rate from 5 per cent to 2 per cent.

Adjusting TCS Collection for Minors

TCS collected in the name of a minor can only be claimed under the minor’s name. However, the funds allow for the adjustment of TCS credit in the minor’s name with the parents' tax liability, but this can only be done when filing income tax returns.