In a major relief for taxpayers and businesses, the government has announced a significant change in the rules regarding TDS (Tax Deducted at Source) and TCS (Tax Collected at Source). The Revenue Department of the Finance Ministry issued a circular on Tuesday exempting taxpayers from the double deduction rule if their PAN (Permanent Account Number) becomes inactive.
Key Announcement
The circular confirms that there will no longer be a double tax deduction on inactive PANs, providing much-needed relief to taxpayers. This exemption is effective immediately and will continue until May 31, 2024. Transactions completed by March 31, 2024, are also exempt from the double deduction rule.
What is TDS?
TDS is a method through which the government collects taxes on various sources of income, such as salaries, interest, or commissions on investments. Specific rules set by the Income Tax Department govern the deduction of TDS. Typically, it is the responsibility of the payer or the organisation making the payment to deposit TDS into the government account. Those who deduct TDS are known as deductors, and the recipients of the payments after tax deduction are called deductees.
TDS Rates
TDS rates range from 1% to 30%, depending on the type of income. For instance, TDS on salaries is usually 10% of the total income, according to the income slab. On the maturity of fixed deposits (FDs), up to 10% TDS is charged, and if the PAN card information is not provided to the bank, the TDS rate increases to 20%.
What is TCS?
TCS, or Tax Collected at Source, is a tax collected by sellers, dealers, vendors, and shopkeepers on high-value transactions. It is an additional amount collected along with the sale price of goods and services.
Conclusion
This new circular brings significant relief to taxpayers by preventing double deductions on inactive PANs and ensuring a smoother tax deduction process. Taxpayers and businesses can now breathe easier, knowing that the government’s latest measures aim to simplify and streamline tax compliance.
