New TDS Rules From April 1: Everything You Need To Know
13 April, 2023
Starting from April 1, 2023, the government has made some major changes to the Tax Deducted at Source (TDS) rules. This is a major update to the existing TDS framework and will have a huge impact on the way businesses, taxpayers and salaried individuals file their taxes. The new rules are aimed at helping the government ensure that all taxes are paid on time and accurately.
In this article, you will learn about the changes to the TDS rules and how they will affect different parties. By understanding the new TDS rules, you can ensure that you are paying the right amount of taxes on time and avoiding any potential penalties.
What are the Changes in TDS Rules?
Union Budget 2023 has proposed several amendments to the existing TDS rules to bring more clarity and transparency in taxation and reduce the burden on taxpayers.
TDS on Online Gaming Winnings
The Budget has proposed that TDS on online gaming winnings be deducted without any threshold benefit. This implies that tax will be deducted either on withdrawal or at the end of the financial year, regardless of the amount won.
This is an amendment from the previous rule, where TDS was only deducted if the amount won exceeded a threshold of ₹10,000. This change is expected to bring more clarity and transparency in the taxation of online gaming winnings and reduce the burden on the online gaming sector.
It will also help the government in collecting taxes from online gaming activities, which was not possible before due to the threshold rule. The move is also likely to bring more regulation and compliance in the online gaming industry.
Removal of TDS Exemption on Interest Payments on Listed Debentures
In the Budget 2022-23, the government has proposed to remove the exemption on TDS deductions on interest payments on listed debentures. This means that all interest payments on listed debentures will now be subject to TDS deduction. The companies will have to pay the same to the government.
As debenture holders, you will now have to bear the cost of TDS deductions before the interest payments are credited to your accounts.
TDS on EPF Withdrawals
TDS on EPF (Employee Provident Fund) withdrawals applies to all withdrawals and not just after April 1, 2023. If the recipient does not provide their PAN (Permanent Account Number), then TDS will be charged at 20%, instead of the maximum marginal rate.
EPF is a retirement savings scheme created by the government and applies to all salaried individuals. It is important to provide PAN to make sure that TDS is applied at the right rate.
This will also ensure that the withdrawal amount is credited to the right bank account and that the right tax benefits can be availed in the future.
Exclusion of Certain Persons from the TDS Scope
The Indian Income Tax Act has been amended to not include certain people from the scope of Tax Deducted at Source. These people are not required to file a return of income and have been notified by the government. This amendment allows such persons to receive payments without the deduction of TDS, as per Sections 206AB and 206CCA.
This will also help simplify the TDS process, as it eliminates the need to deal with certain cases.
TDS on Certain Incomes Paid to Non-Residents or Foreign Companies
TDS is applicable to certain incomes paid to non-residents or foreign companies. The TDS rate will be either 20% or the rate mentioned in a tax treaty, whichever of them is lower. This relief will be allowed only if the payee provides a valid tax residency certificate according to the Budget 2022-23.
This certificate verifies the payee's tax residency status and allows the payee to benefit from the reduced TDS rate as per the tax treaty. It is important to note that TDS is applicable to all payments made to non-residents or foreign companies, regardless of the amount or type of income received.
Therefore, payers need to obtain the tax residency certificate from the payee in order to avail of the reduced TDS rate as per the tax treaty.
Rectification of the TDS Mismatch Problem
The government has amended Section 155 and Section 244A to address the mismatch of TDS. Taxpayers now have up to two years from the financial year in which the tax was withheld to submit an application to the assessing officer to have the assessment corrected and obtain a TDS credit.
Furthermore, Section 244A has been amended to provide that in the event of a refund arising out of the rectification, the interest on the refund shall be paid from the date of the application to the date on which the refund is granted. This amendment has been introduced to provide relief and ease to taxpayers who may have suffered due to the mismatch.
The new TDS rules are a big update to the existing framework and will have a huge impact on the way businesses, taxpayers and salaried individuals file their taxes. These rules will help the government ensure that all taxes are paid accurately. They are aimed to bring in more regulation and compliance in the online gaming sector.
Get started on your financial journey by opening your Salary Account online with HDFC Bank for great offers.
Wondering how to get your TDS certificate? Click here to know more!
Click here to login into your HDFC Bank NetBanking Account!
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.
