Union Budget 2023 proposed several changes in Tax Deducted at Source (TDS) rules that will come into effect from the new financial year starting April 1, 2023. In its “Highlights of Finance Bill, 2023”, the Income Tax Department recently shared the list of such TDS rules that were proposed to change in Budget 2023.
Following is a list of the six most important TDS rule changes that every individual taxpayer should know.
1. TDS on winning from online gaming has been proposed without any threshold benefit. The tax will be deducted either upon withdrawal or at the end of the financial year.
2. The exemption from TDS available on interest payments on listed debenture has been proposed to be removed.
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3. If the recipient of EPF withdrawal does not provide his PAN, then TDS on the withdrawal will be 20%, instead of the maximum marginal rate.
4. Sections 206AB and 206CCA have been amended to exclude certain persons from the scope who are not required to file a return of income and are notified by the government.
5. For certain income paid to non-residents or foreign companies, TDS will be deducted at a rate of 20% or the rate specified in a tax treaty, whichever is lower. This relief will be available if the payee provides a tax residency certificate.
6. Section 155 has been amended to solve a TDS mismatch problem. “When a taxpayer reports income using the accrual method, it may be taxed before the TDS is deducted. It causes a TDS mismatch and prevents the taxpayer from claiming TDS credit. The amendment in section 155 allows taxpayers to apply to the assessing Officer within two years of the financial year in which the tax was withheld,” the Income Tax Department says.
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“The Assessing Officer will then amend the assessment to allow the taxpayer to claim TDS credit. Section 244A is also amended to provide that the interest on refund arising out of the above rectification shall be for the period from the date of the application to the date on which the refund is granted,” it adds.