TDS Chart Change for A.Y.2016-17


mm

Dear All,

With regard to changes in TDS Provision i have prepare small chart for change in rate and limit for TDS.

Rationalization of tax deduction at Source (TDS) provisions

Under the scheme of deduction of tax at source as provided in the Act, every person responsible for payment of any specified sum to any person is required to deduct tax at source at the prescribed rate and deposit it with the Central Government within specified time. However, no deduction is required to be made if the payments do not exceed prescribed threshold limit.

In order to rationalise the rates and base for TDS provisions, the existing threshold limit for deduction of tax at source and the rates of deduction of tax at source are proposed to be revised as mentioned in table 3 and table 4 respectively.

 Increase in threshold limit of deduction of tax at source on various payments mentioned in the relevant sections of the Act

Present Section Heads 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 Race 5,000 10,000
194C Payments to Contractors 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

Revision in rates of deduction of tax at source on various payments mentioned in the relevant sections of the Act:

Present Section Heads Existing Rate of TDS

(%)

Proposed Rate of TDS (%)
194DA Payment 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%

 

Enabling of Filing of Form 15G/15H for rental payments

The provision of sub-section 194-I of the Act, inter alia, provides for tax deduction at source (TDS) for payments in the nature of rent beyond a threshold limit. The existing provisions provide threshold of Rs. 1,80,000 per financial year for deduction of tax under this section. In spite of providing higher threshold for deduction tax under this section, there may be cases where the tax payable on recipient’s total income, including rental payments , will be nil. The existing provisions of section 197A of the Income-tax Act, inter alia provide that tax shall not be deducted, if the recipient of certain payments on which tax is deductible furnishes to the payer a self- declaration in prescribed Form.No. 15G/15H declaring that the tax on his estimated total income of the relevant previous year would be nil. In order to reduce compliance burden in such cases, it is proposed to amend the provisions of section 197A for making the recipients of payments referred to in section 194-I also eligible for filing self-declaration in Form no 15G/15H for non-deduction of tax at source in accordance with the provisions of section 197A.

This amendment will take effect from 1st June, 2016.

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