TDS TCS Amendments in Union Budget 2023: The Union Budget for 2023 proposed several changes in Tax Deducted at Source (TDS) rules that will take effect on April 1. These changes will simplify the process of filing taxes and make it easier for taxpayers to track their TDS deductions. It will also help the government to increase its tax collection.
Recently, the Income Tax Department shared a list of proposed changes to TDS rules in Budget 2023 in its “Highlights of Finance Bill, 2023“. The following are proposed amendments to Tax Deducation at Source (TDS) and Tax Collection at Source (TCS). In the near future, we will provide you with the latest TDS Rates chart for the A.Y. 2024-25 F.Y.2023-24.
TDS Amendments in Budget 2023
This is a list of TDS amendments that have been made out in the budget for 2023. The list contains TDS rates, TDS procedures, TDS widthdrawals, and other TDS amendments. A number of sections are covered within it, including 194BA, 196A, 192A, 193, 194N and 194R. The amendments are aimed at simplifying the process of TDS payment, as well as making it easier for companies to comply with TDS regulations. The amendments will also ensure that the government is able to collect TDS more efficiently.
Section 192A – Relaxation provided for employees not having a PAN
In case a PAN is not supplied, employees will receive accumulated balance of provident fund post-tax deduction at the rate of 20% instead of the existing Maximum Marginal Rate.
Section 193 – Tax to be deducted on interest on specified securities
Deductibility of interest on listed securities in dematerialized form is proposed as of 1 April 2023, which was previously not permitted.
Section 194BA – Introduction of withholding tax provisions for income from online gaming
A new section of TDS will be introduced for online gaming from 1 July 2023, according to the government. The government has proposed this as a way to increase its tax revenues. Online gaming companies will have to deduct TDS at the rate of 30% on their income and deposit the same with the government. At the end of the Financial Year (FY) or at the time of withdrawal by the user, the payer must deduct 30% tax from the ‘net winnings’ in the user’s account. There is no prescribed method for calculating net winnings.
Section 196A – Benefit of tax treaty rate extended to specified income earned by non-residents
Taxes are required to be deducted at 20% of income earned from mutual fund units by non-residents. By submitting a Tax Residency Certificate after 1 April 2023, a non-resident can qualify for the beneficial rate under the tax treaty. The non-resident should ensure that they submit the Tax Residency Certificate before the due date to take advantage of the lower rate.
Section 194N – Enhanced limit for co-operative society
A co-operative society is now proposed to deduct taxes on cash withdrawals exceeding INR 3 crores instead of INR 1 crore from 1 April 2023.
Section 194R – Clarification for tax deductibility on benefits/ perquisites
A clarification is proposed to clarify that tax is to be deducted whether the benefit or perquisite is in cash or in kind, or partly in cash and partly in kind.
TCS Amendments in Budget 2023
This is a list of the TCS amendments that have taken place in budget 2023. Among the amendments are Section 206C(1G) – Enhanced TCS rate on certain remittances made outside India, and Sections 206AB & 206CCA – Exclusion of certain categories of non-filers.
Section 206C(1G) – Enhanced TCS rate on certain remittances made outside India
All remittances under the Liberalised Remittance Scheme (LRS) and overseas tour packages will be taxed at an enhanced rate of 20% as compared to the existing 5% rate. From 1 July 2023, the proposed amendment will take effect.
Section 206AB & 206CCA – Exclusion of specified category from non-filers of tax return
The government notifies certain individuals who are not required to file a return of income from the scope of the tax. The proposal is to exclude such persons from the ambit of this Section and provide relief from higher TDS/TCS rates with effect from 1 April 2023.
Other TDS Amendments in Budget 2023
Section 155 – To solve a TDS mismatch problem.
Income reported using the accrual method may be taxed before TDS is deducted. This results in a TDS mismatch and prevents the taxpayer from claiming TDS credit. Within two years of the financial year in which the tax was withheld, taxpayers may apply to the assessing Officer. In order to claim TDS credit, the Assessing Officer must amend the assessment. Furthermore, section 244A is amended to provide that interest shall be charged on refunds made as a result of the above rectification from the date of application to the date of refund.