Chapter K. TDS Provisions & TCS Provisions:
26. TDS Provisions:
The Finance Bill has proposed to revise the existing threshold upto which tax will not be deducted at source. Some rates of deduction of tax on various payments have also been reduced. The revision will provide relief to small taxpayers and also to other tax payers who find their funds blocked due to TDS provisions. The details of the changes are as follows:
(i) Revision of threshold limits:
-
Present section
Nature of Payments
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 Races
5,000
10,000
194C
Payments to contractor
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
(ii) Revision of rates of deduction:
Present Section |
Heads |
Existing Rate of TDS (%) |
Proposed Rate of TDS (%) |
---|---|---|---|
194DA |
Payments 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% |
(These amendments will take effect from 1st June 2016.)
27. Tax Collection at Source (TCS) on sale of vehicles, goods or services in cash: [S. 206C]
TCS provisions mandate the seller to collect tax at source on sale of specified transactions from the buyer. Presently, goods such as alcoholic liquor, tendu leaves, etc. are covered. The tax varies between 1% and 5%.
27.1 On motor vehicles above Rs. 10 lakhs:
To enable the Government to bring high value transactions in the tax net, the Finance Bill proposes to cover sale of Motor Vehicle of a value exceeding Rs. 10 lakhs also within the TCS provisions.
The income-tax department has already amended rules whereby a person needs to mandatorily provide his PAN from 1st January 2016 on sale or purchase of any motor vehicle without any limit which requires registration (other than two-wheeled vehicles)! It creates an extra burden on transactions of such motor vehicles. Further, this provision will also apply to resale transactions.
27.2 On all cash transactions above Rs. 2 lakhs:
Further, the present provisions also cover cash transactions for sale of bullion and jewellery. To discourage cash transactions, it is proposed to also cover sale, exceeding Rs. 2 lakhs, in cash, of any goods or services (other than bullion or jewellery which are separately covered). To avoid double taxation on such transactions, tax is not required to be collected at source from amounts on which tax is deducted at source by the payer under Chapter XVII-B. However, these provisions will not apply to such class of buyers who fulfil prescribed conditions. The conditions have not yet been specified.
These provisions will come in to effect from 1st June 2016.