Increase in threshold limits and reduction of rates for deduction of tax at source in respect of certain payments [Chapter XVII-B]
Effective from: 1st June, 2016
(i) Requirement of deduction of tax at source under Chapter XVII-B if payments exceed the specified threshold:
Every person responsible for payment of any specified sum on which tax is deductible at source under Chapter XVII-B to any person is required to deduct tax at source at the prescribed rate and remit the same to the Central Government within specified time.
However, no deduction is required to be made if the payments do not exceed prescribed threshold limit specified under the relevant section.
(ii) In order to rationalise the rates and base for TDS provisions, the existing threshold limits for deduction of tax at source and the rates of deduction of tax at source have been revised with effect from 1st June, 2016.
Revision in threshold limits for deduction of tax at source from certain payments:
|
Section |
Nature of payment | Threshold limit (Rs.) | ||
| Upto
31.5.2016 |
From 1.6.2016 |
|||
| (1) | 194DA | Payment in respect of life insurance policy |
30,000 |
50,000 |
| (2) | 194EE | Payments in respect of deposits under
National Savings Scheme |
5,000 |
10,000 |
| (3) | 194G | Payment to contractors (revision of threshold of aggregate payment in a year) |
75,000 |
1,00,000 |
| (4) | 194D | Insurance commission |
20,000 |
15,0007 |
| (5) | 194G | Commission on sale of lottery tickets |
1,000 |
15,000 |
| (6) | 194H | Commission or brokerage |
5,000 |
15,000 |
| (7) | 194LA | Payment of compensation or enhanced compensation on compulsory acquisition of immovable property |
2,00,000 |
2,50,000 |
Reduction in rate of tax to be deducted at source in respect of certainpayments:
| Section Nature of payment |
Nature of payment |
Rate of TDS
|
||
|
Upto 31.5.2016
|
From 1.6.2016 |
|||
| (1) | 194DA |
Payment in respect of life insurance policy |
2% |
1% |
| (2) | 194EE | Payments in respect of deposits under
National Savings Scheme |
20% |
10% |
| (3) | 194G | Commission on sale of lottery tickets |
10% |
5% |
| (4) | 194H | Commission or brokerage |
10% |
5% |
(iii) Omission of non-operational provisions for TDS u/s 194K and 194L:
Further, the non-operational provisions for deduction of tax at source under section 194K in respect of income from units of a mutual fund or UTI (which ceased to be in force since 1st April, 2003) and section 194L in respect of payment of compensation on compulsory acquisition of a capital asset (which ceased to be in force since 1st June, 2000) have been omitted with effect from 1st June, 2016.