Amendments brought in TDS and TCS by Finance bill 2016. Finance Minister Arun Jaitely has brought many changes in TDS provisions in terms of Threshold limits, information to be furnished and coverage. Let’s have a look at those amendments. TDS Amendments by Finance bill 2016, Applicable from 01-06-2016. Check TCS Amendments made by Finance Bill 2016.
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Amendments brought in TDS and TCS by Finance bill 2016
Tax deduction at source – Changes brought by Union Budget 2016:
As per the TDS provisions as stated in the income tax act, Tax at source to be deducted by a person before he makes payment to someone if the amount involved exceeds the threshold limits specified in the act. Finance bill 2016 brought following changes in these threshold limits.
| S.no | Section | Description of the provision | Existing (Old) | Proposed (New) |
| 1 | 192A | TDS on withdrawal of EPF:
Tax should be deducted at a rate specified if it exceeds the limit having service of < 5 years (10% if PAN is submitted, Maximum marginal rate as applicable if PAN is not submitted – If form no 15G/15H is submitted then no need to deduct TDS) |
30,000 |
50,000 |
| 2 | 194BB | TDS on Winnings from Horse races:
If the winnings from the horse races exceeds the threshold limit, tax would be deducted at 30% flat. |
5,000 |
10,000 |
| 3 | 194C | TDS on Payment to contractors
Tax should be deducted at the following rates if the payment to resident contractor to carry out any work in connection to a contract exceeds the threshold limit 1 % – If the recipient is individual or HUF 2% – Other than Individual and HUF (Limit of single payments 30,000 has not been changed finance bill 2016) |
75,000 |
1,00,000 |
| 4 | 194D | TDS on Payment of insurance commission
If the payment made on account of commission for securing insurance business, exceeds the threshold limit then tax shall be deducted at 10%. (reduced to 5% in finance bill 2016) |
20,000 | 15,000 |
| 5 | 194G | TDS on payment of commission of lottery tickets | 1,000 | 15,000 |
| 6 | 194H | TDS on Payment of Brokerage/commission
Tax at specified rate (existing 10% has been reduced to 5% in finance bill 2016) if the amount exceeds the threshold limit. |
5,000 |
15,000 |
| 7 | 194LA | TDS on Amount of compensation on transfer of certain immovable properties:
If the total amount of compensation exceeds the threshold limit then tax should be deducted at 1% |
2,00,000 |
2,50,000 |
In addition to the changes in threshold limit as noted in above table, Finance bill has also brought changes in the rate of TDS on certain payments. These are given below:
| S.no | Section | Description of the provision | Existing (Old) | Proposed (New) |
| 1 | 194D | TDS on payment of insurance commission | 10% | 5% |
| 2 | 194DA | TDS on Payment in respect of life insurance policy | 2% | 1% |
| 3 | 194EE | TDS on Payments in respect of deposits under National Savings Scheme | 20% | 10% |
| 4 | 194G | TDS on payment of Commission on sale of lottery ticket | 10% | 5% |
| 5 | 194H | TDS on payment of Commission or brokerage | 10% | 5% |
| 6 | 194LBB | TDS on income from units of investment funds | 10% | 1.10% if payee is a resident
2.Rates inforce if he’s a nonresident |
| 7 | 194LBC | TDS on payment to an investor in respect of an investment in securitization trust | – | 1.25% – if payee is resident individual or HUF
2.30%-if he’s other than individual or HUF (Resident) 3.Rates in force for nonresident payee |
Tax collected at source:
| 1(a) | 206C | Sale of Motor vehicle | – | TCS has to be collected at 1% if the value of motor vehicle exceeds Rs 10 lakhs. |
| 1(b) | 206C | Sale of goods or services | – | TCS has to be collected at 1% if the value exceeds Rs 2 lakhs (other than billion and Jewelry and those on which TDS is made already) |
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