 "E-commerce to ESOPs: How TDS and TCS changes in Budget 2024 will affect you")
The government on Tuesday proposed several changes in the tax deducted at source structure, including reducing the rate for e-commerce operators to 0.1 per cent from existing 1 per cent, and allowing TCS credit against TDS deducted on salaries.
”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,” Finance Minister Nirmala Sitharaman said in her Budget Speech in the Lok Sabha.
In the first Budget of Modi 3.0, Sitharaman proposed that the 5 per cent TDS rate on many payments is being merged into the 2 per cent TDS rate and the 20 per cent TDS rate on repurchase of units by mutual funds or UTI is being withdrawn.
TDS rate on e-commerce operators is proposed to be reduced from 1 per cent to 0.1 per cent.
Also, credit of TCS is proposed to be given in the TDS to be deducted on salary.
”Further, I propose to decriminalise delay for payment of TDS up to the due date of filing statement for the same. I also plan to provide a standard operating procedure for TDS defaults and simplify and rationalise the compounding guidelines for such defaults,” the minister said.
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.
Impact Shorts
More Shorts”The amount of TCS was to be claimed by the employee in the tax return since there was no specific provision to consider the same by the employer while deducting tax at source on salaries. This has now been enabled, mitigating cash flow challenges for employees.” Sitharaman said all the major tax payer services under GST and most services under customs and income tax have been digitalised.
All remaining services of customs and income tax, including rectification and order giving effect to appellate orders will be digitalised and made paper-less over the next two years.
Sitharaman further said while the government’s concerted efforts to reduce pendency of appeals at various appellate fora are beginning to show good results, it will continue to engage our highest attention.
”To dispose of the backlog of first appeals, I plan to deploy more officers to hear and decide such appeals, especially those with large tax effect,” she said.
With a view to reduce litigation and provide certainty in international taxation, she said the government will expand the scope of safe harbour rules and make them more attractive. We will also streamline the transfer pricing assessment procedure.
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