Changes in TDS provisions from June 1st 2016

1. INCREASE IN THRESHOLD LIMIT FOR TDS UNDER VARIOUS SECTION IS AS FOLLOWS :

Present Section

Heads

Existing Threshold
Limit (Rs.)

Proposed Threshold Limit
(Rs.)

1 92A

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

 

2. REVISION IN TDS RATES :

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%

 

 

 

 

 

 

 

 

 

 

3. EXEMPTION FROM REQUIREMENT OF FURNISHING PAN TO NON RESIDENTS:

Section 206AA provide that in case deductee doesnot furnish PAN, tax need to be deducted @ 20%. This provisions were applicable to payments to non resident and foreign companies as well. Hence taxes were required to be deducted @20 % on foreign remittance though DTAA provided for lesser rate as invariably the foreign companies did not have PAN.  Amendment to section 206AA provides much sort exemption to Non Residents and Foreign Companies from requirement of furnishing PAN. This exemption has come into effect from June 1st, 2016.

4.  Form 15G/ 15H made applicable to TDS on Rent under section 194I.

Till now a person receiving interest income was entitled to furnish form 15G/ 15H to payer of interest to avoid deduction of  TDS on interest. 15G/ 15H is declaration stating that total income of payee for the year will be below the threshold limit of income subject to tax and hence there will not any income tax liability.

From June 1st form 15G / 15H has been made applicable to deduction of tds u/s 194I, the receiver of rent can provide a declaration in form 15G/15H to payer of rent and claim exemption from deduction of tds from rental receipts.

5. CHANGES IN DUE DATES FOR FILING OF TDS RETURN AND ISSUE OF TDS CERTIFICATES :

This changes is effective for TDS return due after June 1st, 2016

6. TCS PROVISIONS EXTENDED TO SALE OF GOODS AND SERVICES  :

TCS @ 1% has been made applicable to below from june1st 2016:

a. Sale of Motor vehicle of the value exceeding Rs 10 lakhs whether amount is received in cash, cheque or any other mode.

b. Sale in cash of any goods ( other than Bullion and Jewellery) or providing of any services (  other than payments on which tax is deducted at source  under tds provisions)  of value exceeding Rs 2 lakh, where sale consideration has been received in cash .

The revised tcs chart with effect from June 1st 2016, is as follows :

Nature of Goods

TCS Rate

Alcoholic liquor for human consumption

1%

Tendu Leaves

5%

Timber obtained under a Forest Lease

2.5%

Timber obtained by any mode other than Forest Lease

2.5%

Any other Forest produce not being forest timber or tendu leaves

2.5%

Scrap

1%

Minerals being Coal or Lignite or Iron ore

1%

Parking Lot, Toll Plaza, Mining and Quarrying

2%

Where ANY amount of consideration is received in cash on sale of :- Bullion (consideration exceeds Rs. 2 Lakhs), Jewellery (consideration exceeds Rs. 5 Lakhs), and with effect from June 1,2016,Any other goods and services (exceeding Rs. 2.00 Lakh) if TDS Provision is not applicable

1%

Where amount is received by cheque or any other mode on sale of :- Motor vehicle of the value exceeding Rs. 10.00 Lakh (applicable from June 1,2016)

1%