The government and tax regulators are always been known for increase in tax rates, new ways of taxing transactions and so on. But off late there have been various respites given to taxpayers, the article aims to highlight such measures brought in Income Tax.
1. Relaxation in TDS threshold
For the purpose of Tax Deduction at Source, various annual thresholds have been increased to benefit small income earners. The threshold limit of deduction of TDS on withdrawal of EPF has been revised to Rs 50,000 from Rs 30,000 earlier. Similarly the threshold limit for TDS on contractors has been revised to Rs 100,000 from Rs 75,000 earlier.
2. Relaxation in TDS Rates
The relaxation in TDS rates has also been made in case of TDS on LIC receipts to 1% from 2% earlier. On a similar note TDS on NSS deposits has been reduced from 20% to 10%. The TDS on commission has also been reduced to 5% from 10% earlier under various sections of Income Tax Act. These new threshold limits and lower TDS rates would be applicable from 1st June 2016.
3. Taxation of Unlisted shares clarified
Clarity on taxation of unlisted shares has been brought. As per Income Tax Law, Income earned from Sale of shares could be held as either Business Income or capital gains depending upon the facts of the case which had led to a lot of litigation over the years. In order to avoid disputes and take a consistent view in assessments of such income, in May 2016, CBDT has decided that income arising from transfer of unlisted shares would be considered under the head ‘Capital Gain’. This is certainly a welcome move for the taxpayer as capital gains are charged at a lesser rate than business income. By taking away the discretion with Assessing Officer, all disputes would be put to rest. Further, the sale of unlisted shares held for more than 24 months will be considered as Long Term Capital Gain instead of 36 months earlier.
4. Relaxation in recently rolled out TCS norm
There is one more welcome move rather roll back from Income Tax authorities. The clarifications have been made on applicability of Tax Collection at Source (TCS) on cash transactions. This was earlier made applicable on even Rs 1 cash transaction forming part of invoices amounting to more than Rs 2 lacs. However, now it has been clarified that only cash transactions amounting to Rs 2 lacs and above would be subject to TCS.
We hope with these ease outs, the concerns of small tax payers should have some relieved to some extent.
Saurabh Gupta is a practicing Chartered Accountant having qualified post qualification course in “Master in Business Finance” from ICAI. He has over 14 years of experience in finance and accounts domain. He specializes in strategic planning and implementation, financial control, fund raising, transfer pricing audits, tax planning & statutory compliances. He is having versatile corporate experience in retail sector and has worked in financial controller role with DLF Brands prior to joining practice.