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Rashmin Sanghvi & Associates

Chartered Accountants

220, 2nd Floor, Arun Chambers,
Tardeo Road,
Mumbai - 400 034,
Maharashtra, India.

Tel. Nos.: (+91 22) 2351 1878, 2352 5694.

Fax : (+91 22) 2351 5275.

Email : [email protected]

 
Home Articles Taxation         Share :

Budget 2016 Chapter K

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.