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Rates of TDS, Threshold limit for deduction: Union Budget 2016-17

UNION BUDGET 2016-17
FINANCE BILL, 2016 
PROVISIONS RELATING TO DIRECT TAXES

Rationalization of tax deduction at Source (TDS) provisions

Under the scheme of deduction of tax at source as provided in the Act, every person responsible for payment of any specified sum to any person is required
to deduct tax at source at the prescribed rate and deposit it with the Central Government within specified time. However, no deduction is required to be
made if the payments do not exceed prescribed threshold limit.

In order to rationalise the rates and base for TDS provisions, the existing threshold limit for deduction of tax at source and the rates of deduction of
tax at source are proposed to be revised as mentioned in table 3 and table 4 respectively.
Table 3: Increase in threshold limit of deduction of tax at source on various payments mentioned in the relevant sections of the Act
Present Section Heads Existing Threshold Limit (Rs.) Proposed Threshod Limit (Rs.)
192A Payment of accumulated balance due to an employee 30,000 50,000
194BB Winnings from Horse Race 5,000 10,000
194C Payments to Contractors Aggregate annual limit of 75,000 Aggregate annual limit of 1,00,000
194LA Payment of Compensation on acquisition of certain Immovable Property 2,00,000 2,50,000
194D Insurance commission 20,000 15,000
194G Commission on sale of lottery tickets 1,000 15,000
194H Commission or brokerage 5,000 15,000

Table-4 : Revision in rates of deduction of tax at source on various payments mentioned in the relevant sections of the Act:


Present Section Heads Existing Rate of TDS (%) Proposed Rate of TDS (%)
194DA Payment in respect of Life Insurance Policy 2% 1%
194EE Payments in respect of NSS Deposits 20% 10%
194D Insurance commission Rate in force (10%) 5%
194G Commission on sale of lottery tickets 10% 5%
194H Commission or brokerage 10% 5%

The following provisions which are not in operation are proposed to be omitted as detailed in Table 5.

Table 5: Certain non-operational provisions to be omitted



Present Section Heads Proposal
194K Income in respect of Units To be omitted w.e.f 01.06.2016
194L Payment of Compensation on acquisition of Capital Asset To be omitted w.e.f 01.06.2016

These amendments will take effect from 1st June, 2016.

[Clause 70 to 79] 

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