Latest Significant Changes and New Sections in TDS

Tax Deducted at Source (TDS) is a very common topic in the finance industry. So how many sections are there under which TDS is deducted the answer is 28 and Counting. The word counting means, in every finance act introduced by Indian finance minister there is some change or most of the time a new section for tax deduction is inserted.

Why Government keep so much focus on improving the TDS regime under income tax?

Around 50 percent of the tax collection by government is by way of TDS. So it can be said that it is the main and major source of revenue collection for the government, that's why they keep so much pressure on improving TDS regime. Every finance Act has something about the TDS. Government is trying to bring in the tax net each and every Individual who is liable to pay tax or even liable to file tax return by way of deducting TDS so to get the refund that individual has to file the tax return.

So what are the Latest and Significant Changes and Some New Sections in TDS Regime that will affect Individuals?

Here are few Amendments:

Amendment in Section 194A

(**_No TDS will be deducted for payment of interest by an infrastructure debt fund_) - This Section is specifically exempting the TDS deduction in case where Infrastructure debt funds paying interest to investors for zero coupon bonds issued by such funds.

194Q

Tax Deduction at Source on Purchase of Goods: This section has been introduced in the Finance Act 2021. This section is applicable on the buyer of the goods. Buyer whose turnover in the preceding financial year exceeds Rs. 10 Crores, then such buyer is required to deduct TDS at the rate of 0.1% on the purchase of goods from the seller, if the purchase value exceeds Rs. 50 Lakhs in a financial year.

TDS under this section will not be deducted if TDS under any other section under this Income tax Act is deductible.

_Provided Further,_ If section 206(1H) is applicable which talks about Collecting TCS i.e. Section 194 Q and Section 206(1H) are applicable at the same time, then section 194Q will override and be applied i.e. in that case buyer have to deduct TDS and TCS will not be collected by the seller.

194P

Tax Deduction in the case of Senior Citizens (Specified only): This section has brought in to provide some relief to senior citizens (Age 75 years or more). Relief is that, Income tax return need not to be filed by Senior Citizens who's age is 75 years or more.

_Provided,_ Income should only be by way of pension and no other income should be credited in the account.

_Provided,_ That Senior Citizen shall furnish a declaration in the prescribed format to the designated bank for providing the deduction details (VI-A Deductions) and Rebate under section 87A.

This amendment will be effective from 01, April, 2021.

Hope the article was helpful. Thanks