From the Viewsroom

Time to tweak TDS provisions

Parvatha Vardhini C | Updated on January 09, 2018

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They have not kept pace with the exemption limit and tax slabs

The Central Board of Direct Taxes is open to suggestions on easing of TDS (tax deduction at source) rates, said Chairman Sushil Chandra recently. It is well known that TDS is tedious especially for individualtax payers. Over the years, compulsory triggering of TDS provisions on payment as low as ₹2,500 (withdrawals on NSS deposits), ₹5,000 (receipt of commission, brokerage, interest on deposits other than bank deposits) or ₹10,000 (interest on bank deposits) has meant that small investors whose income did not fall in the taxable limit had to remember to promptly give Form 15G or 15H to the institution deducting the taxes. Even if their income was taxable, high TDS rates of 10 per cent in many cases implied huge refunds and long waits for the locked up money to be released. This is because while basic exemption limit and tax slabs steadily moved up over the years, TDS rates remained constant.

However, based on the Justice RV Easwar Committee report put out in January 2016, the Government has already taken a steps in TDS reforms.

In Budget 2016, for instance, the threshold limit for the applicability of TDS on receipt of commission or brokerage was moved up to ₹15,000 as against ₹5,000 earlier. The TDS rate for the same was slashed by half to 5 per cent. Similarly, TDS rates for receipts from a life insurance company was brought down to 1 per cent from 2 per cent. In the case of NSS deposits, TDS rates were eased to 10 per cent from 20 per cent. It would help if the Government looked at the Easwar Committee report to review the other recommendations. This includes the increase in threshold limit for TDS on bank deposits to ₹15,000 (₹ 10,000 currently) and lowering TDS rate on it to 5 per cent (10 per cent now).

Senior Assistant Editor, Research Bureau

Published on August 27, 2017

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