With Budget 2020, major amendments made with regard to TDS are as under:
1. Amendment has been made in section 194A, 194C, 194H, 194I and 194J wherein now the individual/ HUf whose turnover from business exceeds Rs. 1 crore and from profession exceeds Rs. 50 lakh would be liable to deduct TDS. Earlier also limit was the same, however since it was derived from section 44AB and now there are 2 limits u/s 44AB (1) and therefore Income tax department has made it direct based on turnover rather than deriving it from another section.
2. Now TDS would be deducted u/s 194 on dividend received for equity shares which was earlier covered under DDT. Such TDS shall be deducted at 10% if the amount of dividend exceeds Rs. 5,000.
3. Also u/s 194A now a co-operative society would deduct TDS if it’s turnover exceeds Rs. 50 crore in previous year and the amount being paid to payee exceeds Rs. 50,000 in case of senior citizen and Rs. 40,000 in any other case.
4. Under section 194J TDS shall be deducted at 2% for technical services and for royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films.
Three new section’s have also been introduced:
1. Section 194K deals with TDS on Income from mutual fund at 10% if amount exceeds Rs. 5,000. [Applicable from 01.04.2020]
2. Section 194N has been amended to include now TDS on withdrawal of cash exceeding Rs. 20 lakh at 2% if the person has not filed Income tax return for past 3 years. [Applicable from 01.07.2020]
3. Section 194-O deals with payment by E-commerce operator to E-commerce participant. [Applicable from 01.10.2020]
Now let’s take a look at the TDS rate which are most useful: Other than Individual/ HUF all other types of entities have to deduct TDS compulsorily unless otherwise specified.
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*Total consideration will include any amount paid in name of membership fee, car parking fee, maintenance fee or advance which is incidental to transfer of property.
Provided that no deduction shall be made u/s 194C or 194J if payment is made for personal purpose i.e. paying to contractor for constructing residential house or paying professional fees to doctor for personal health etc.
Time of deduction: At the time of credit or payment, whichever is earlier. Except section 192, 194N wherein TDS needs to be deducted at the time of payment.
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