Major Changes in TDS and TCS Rates from 1st October 2024

The Finance Act (No. 2), 2024 introduces significant changes in the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) rates across various sections of the Income Tax Act, 1961. These changes, taking effect primarily from 1st October 2024, impact a wide range of transactions. Detailed notifications and circulars are expected soon to provide further clarification.

Revised TDS Rate Chart from 1st October 2024:

Section	Current TDS Rate	Proposed TDS Rate	Effective Date
194D (Insurance commission)	5%	2%	April 1, 2025
194DA (Life insurance policy)	5%	2%	October 1, 2024
194G (Lottery tickets)	5%	2%	October 1, 2024
194H (Commission/brokerage)	5%	2%	October 1, 2024
194-IB (Rent)	5%	2%	October 1, 2024
194M (Certain sums by individuals/HUF)	5%	2%	October 1, 2024
194-O (E-commerce payments)	1%	0.1%	October 1, 2024
194F (Mutual fund/UTI repurchase)	20%	Omitted	October 1, 2024
New Section 194T (Partnership payments)	N/A	10%	April 1, 2025
206C(1F) (TCS on notified goods)	1%	Extended to other luxury goods	January 1, 2025
194-IA (Sale of immovable property)	1%	Clarification on aggregate consideration	October 1, 2024

Key Section-Wise Changes:

Section 194D – Insurance Commission:

The TDS on insurance commission for individuals and HUFs will reduce from 5% to 2%, effective from April 1, 2025.

Section 194DA – Payments under Life Insurance Policy:

The TDS rate on life insurance policy payouts will decrease from 5% to 2%, starting from October 1, 2024.

Section 194G – Commission on Lottery Tickets:

The TDS on commissions related to lottery tickets will drop from 5% to 2%, effective from October 1, 2024.

Section 194H – Commission/Brokerage:

From October 1, 2024, the TDS on commission or brokerage payments to individuals and HUFs will be reduced to 2%, down from 5%.

Section 194-IB – Rent Payments:

The TDS on rent paid to individuals or HUFs will be cut from 5% to 2%, starting from October 1, 2024.

Section 194M – Payments by Individuals or HUFs:

Payments made by individuals or HUFs for work or professional services will attract a TDS of 2% instead of 5%, from October 1, 2024.

Section 194-O – E-commerce Payments:

The TDS rate for payments made by e-commerce operators to participants will drop significantly, from 1% to 0.1%, starting from October 1, 2024.

Conclusion:

The above changes highlight a shift towards lowering the tax burden on various transactions. Stay tuned for more updates and detailed notifications that are expected to follow soon.

For more updates on TDS and TCS rates, refer to official circulars from the Income Tax Department.