TDS rates reduced in Budget 2024

On July 23, 2024, Finance Minister Nirmala Sitharaman presented Budget 2024 including revisions to the Tax Deducted at Source (TDS) rates.

TDS Sections	Current TDS Rate	Proposed TDS Rate	Effective from
Section 194D – Payment of insurance commission in case of  other than company	5%	2%	1st April 2025
Section 194DA – Payment in respect of life insurance policy	5%	2%	1st Oct 2024
Section 194G -Commission on sale of lottery tickets	5%	2%	1st Oct 2024
Section 194H – Payment of commission or brokerage	5%	2%	1st Oct 2024
Section 194-IB – Payment of Rent by certain individuals or HUF	5%	2%	1st Oct 2024
Section 194M – Payment of certain sums by certain individuals or HUFs	5%	2%	1st Oct 2024
Section 194-O – Payment of certain sum by e-commerce operator to e-commerce participants	1%	0.10%	1st Oct 2024
Section 194F – Payment on account of repurchase of units by mutual funds or UTI	Proposed to be Omitted		1st Oct 2024

Updated TDS rules for Partnership Firms: The new changes will also affect partnership firms as well starting from April 1, 2025. According to the latest updates, payments exceeding Rs 20,000 annually to partners will attract a 10 per cent TDS under section 194T.

Rate reduction to E-commerce operators: As the digital marketspace is surging, the new proposed changes will also affect this segment. The TDS rates for e-commerce operators will be reduced from 1 per cent to 0.1 per cent.

Changes in TCS Credits for Minor’s Income: Starting from January 1, 2025, the new update will also benefit families where it allows clubbing the minors income as the budget allows parents to adjust TCS credits against their tax liability. Previously, TCS credits could only be claimed by the minor