Several changes in the Tax Deducted at Source are coming into effect from today and these involve some common transactions such as commission or payment to brokerages.
As announced by Finance Minister Nirmala Sitharaman in her Budget on July 23, TDS on a host of items are going down from October 1, 2024. (Picture Credit: PTI)
As the name implies, TDS or Tax Deducted at Source implies a procedure where a fixed share of tax is deducted from the payment to the payee by the payer and the amount is deposited to the account of the government in the form of tax. In India TDS is applicable to a variety of payments such as interest payable on deposits, commissions, fee of brokerages and even salary.
A number of TDS revisions have been effected from October 1, 2024. These will pertain to transactions made by common people in the country. Many of these are reductions from earlier rates.
Mutual Fund investors to benefit
In a relief to mutual fund investors, TDS on repurchase of units will be withdrawn as announced by Finance Minister Nirmala Sitharaman. Section 194F of the Income Tax Act 1961 pertains to TDS on repurchase of mutual fund units. According to the Finance Bill, this is being withdrawn from today, October 1, 2024.
Insurance payments to lottery tickets
The TDS for payments made by e-commerce operators is slashed from 1% to 0.1%. Similarly, the payment that a beneficiary receives from life insurers is dropping from 5% earlier to 2% now (Section 194DA).
Numerous people buy lottery tickets in India. TDS is applicable on the commission from the sale of lottery tickets (section 194G). Like insurance payments, this too is being dropped from 5% to 2%.
TDS is also being slashed from today on rent paid by HUF (Hindu Undivided Family). The rate of the reduction is from 5% to 2% (Section 194-IB).
Floating rate bonds
There will be no tax deducted at source if one earns less than Rs 10,000 a year from floating rate bonds. In the budget, it was decided that TDS will be slapped at 10% from central government and state government bonds too.
STT on F&O rising
The Securities Transaction Tax (STT) for F&O (futures and options) is rising from today. The STT on options will rise 1.6 times from 0.0625% to 0.1% of the premium amount. The STT on futures sales is going up by the same factor from 0.0125% to 0.02% of the trade value.
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