Government has reduced the rates of Tax Deducted at Source (TDS) on several deductions with a view to improve cash flow, especially of small tax payer.
According to the Budget proposal for 2016-17, the TDS rate in respect of life insurance policies has been reduced from 2 per cent to 1 per cent and on insurance commission from 10 per cent to 5 per cent.
The TDS rate has been halved in case of National Savings Scheme to 10 per cent, and on commission on sale of lottery tickets and other brokerages to 5 per cent.
The Budget also proposes to abolish TDS on income in respect of unit and payment of compensation on acquisition of capital assets.
As part of the rationalisation exercise, the limits for deduction of TDS has been raised.
In case of payment of accumulated balance due to an employee in EPF, the TDS limit is being raised from Rs. 30,000 to Rs. 50,000.
The limits for TDS deduction have also been raised in case of payments to contractors from Rs. 75,000 to Rs. 1 lakh, commission or brokerages (from Rs. 5,000 to Rs. 15,000), commission on lottery ticket (from Rs. 1,000 to Rs. 15,000) and on acquisition of immovable property (from Rs. 2 lakh to Rs. 2.5 lakh).
However, in case of insurance commission the threshold for TDS deduction has been reduced from Rs. 20,000 to Rs. 15,000.
The Budget also proposed to extend the presumptive taxation scheme to professionals with gross receipts up to Rs. 50 lakh with the presumption of profit being 50 per cent of the gross receipts.
At present, the Presumptive taxation scheme under the Income Tax Act is available for small and medium enterprises i.e. non corporate businesses with turnover or gross receipts not exceeding Rs. 1 crore.
Jaitley also proposed to increase the turnover limit under this scheme to Rs. 2 crore with a view to give relief to assessees in the MSME category.
The Budget also proposes to increase the rate of interest from 6 per cent to 9 per cent on delay in giving effect to Appellate Tribunal’s order beyond 90 days.
The monetary limit for deciding an appeal by a single member bench of ITAT will be enhanced from Rs. 15 lakh to Rs. 50 lakh.
There was need of increment on limit for TDS deduction on Bank and Copmany’s deposit.Currently there is cellinf of Rs.10000/ and Rs.5000/- respectively.
Many senior citizens who have only income source of interest income are facing more difficulty.They income do not reach to to taxable level.They have to file reTurn only to claim TDS.It seems funny that in budget TDS exemption limit has been raised on income from Horse race (gambling) and Lottery tickets.