Income Tax News: What's TDS and TCS Reduction? Check the Latest Update Here

Income Tax News: In a significant move aimed at providing relief to taxpayers and businessmen, the government has announced a major exemption regarding Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) deduction in cases of PAN (Permanent Account Number) deactivation. The Revenue Department of the Finance Ministry issued a circular on Tuesday outlining the details of the exemption.

What's TDS and TCS Reduction? Check the Latest Update Here

Under the new provision, taxpayers are now exempted from the rule of double deduction in cases where PAN becomes inactive. This exemption will be applicable until May 31, 2024, providing considerable relief to taxpayers/businesses. Transactions conducted until March 31 will also be covered under this exemption.

TDS, which is deducted on various sources of income such as salary, interest, or commission received on investments, plays a crucial role in tax collection by the government. However, not all incomes and transactions are subject to TDS.

The Income Tax Department has established rules for deducting TDS

The Income Tax Department has established rules for deducting TDS, and it's important to note that the government does not directly deduct TDS. The responsibility for depositing TDS into the government account lies with the payer or organization making the payment, referred to as deductors. The recipient of the payment after tax deduction is known as the deductee.

TDS rates range from one percent to 30 percent, depending on the type of income. For instance, TDS on salary is calculated based on income slabs, with a rate of 10 percent applied to the total income. Similarly, up to 10 percent TDS is levied on Fixed Deposit (FD) maturity, while a higher rate of 20 percent is charged if the PAN information is not provided to the bank by the customer.

On the other hand, Tax Collected at Source (TCS) is collected from income by sellers, dealers, vendors, and shopkeepers, primarily on high-value transactions. TCS serves as a mechanism for tax collection at the source, contributing to government revenue.

The government's decision to grant exemption on double deduction in cases of PAN deactivation will provide much-needed relief to taxpayers and alleviate the burden of compliance.

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