Union Budget 2024: FM Proposes TDS Rate Reduction For E-Commerce Operators. Check The New Rates

Union Budget 2024: Sitharaman proposed consolidating the 5 per cent TDS rate into a 2 per cent rate and eliminating the 20 per cent TDS rate on the repurchase of units by mutual funds or UTI

Union Budget 2024: The government has announced significant changes to the tax deducted at source (TDS) structure, including a reduction in the rate for e-commerce operators from 1 per cent to 0.1 per cent. Additionally, taxpayers will now be able to claim tax collected at source (TCS) credit against TDS deducted on salaries.

Finance Minister Nirmala Sitharaman outlined these proposals during her Budget Speech in the Lok Sabha on Tuesday. "A beginning is being made in the Finance Bill by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions, and capital gains taxation," she said.

In the first Budget of Modi 3.0, she proposed consolidating the 5 per cent TDS rate into a 2 per cent rate and eliminating the 20 per cent TDS rate on the repurchase of units by mutual funds or UTI.

Sitharaman also proposed decriminalising delays in TDS payments up to the due date for filing the corresponding statements. Additionally, she plans to introduce a standard operating procedure for TDS defaults and simplify the guidelines for compounding such defaults.

Rajesh Magow, co-founder & group CEO at MakeMyTrip, said, "The government's continued emphasis on infrastructure development is commendable. Enhanced road infrastructure will bolster the travel and tourism sector. We also welcome the initiatives to develop iconic spiritual and cultural sites into world class tourist hotspots."

"The decision to reduce the TDS rate on e-commerce operators to 0.1 per cent is a welcome move. Furthermore, the provision of credit for TCS against income tax under 'Income from Salaries' is logical and will provide much desired relief to taxpayers who travel internationally," he added.

Deloitte India Partner Saraswathi Kasturirangan said, "Remittance of funds towards employee stock purchase plans are subject to TCS at 20 per cent if the remittance amount exceeds Rs 7 lakhs. This amount was to be claimed by the employee in the tax return since there was no provision to consider it by the employer while deducting tax at source on salaries. This has now been enabled, mitigating cash flow challenges for employees."

In her speech, Sitharaman said that all major taxpayer services under GST and most services under customs and income tax have been digitised. Over the next two years, all remaining services, including rectification and orders on appellate decisions, will also be digitised and made paperless.

To address the backlog of appeals, Sitharaman plans to deploy more officers to expedite the resolution of cases, especially those with large tax implications. She also announced plans to expand the scope of safe harbour rules and streamline the transfer pricing assessment procedure to reduce litigation and provide certainty in international taxation.