TDS on life insurance payouts reduced by amendment, lowering withholding obligation on qualifying policy payments for residents.
Section 194DA requires persons paying sums under life insurance policies to deduct tax at source on the income component of such payments, excluding amounts exempt under clause (10D) of section 10. The Finance (No.2) Bill, 2024 proposes a reduction in the withholding rate under Section 194DA, with the amendment to take effect from the first day of October under Clause 54, thereby lowering the deductor's TDS obligation on qualifying life insurance payouts to residents.

TDS on lottery commissions reduced under section 194G, easing withholding obligations for payers from October onward.
Payers of commission, remuneration or prizes on sale or distribution of lottery tickets must deduct tax at source at the statutory withholding rate at the time of credit or payment, whichever is earlier. The Finance Bill amendment (Clause 56) lowers that withholding rate, with the reduction effective from the commencement date specified in the Bill.

TDS on commission and brokerage reduced, altering withholding obligations and the timing of deduction for non individual payors.
Section 194H imposes TDS on persons other than individuals and HUFs for commission or brokerage (excluding insurance commission), requiring deduction at the time of credit or payment. The Finance Bill proposes a reduction in the TDS rate under section 194H, with the amendment to take effect from the stated commencement date, thereby modifying deductor withholding obligations for subsequent payments.

TDS on rent reduced for individuals and HUFs, lowering withholding obligations for specified high-value rent payments.
Section 194-IB presently obliges individuals and Hindu undivided families (except those excluded by the second proviso to section 194-I) paying rent above the monthly threshold to deduct tax at source; the Finance Bill amends the provision to reduce the TDS rate from five percent to two percent, with the amendment operative from 1 October 2024.

TDS on payments for work, commission and professional fees reduced to a lower withholding rate, effective from October.
Section 194M requires individuals and Hindu undivided families (except those already required to deduct under related contractor, commission or professional service provisions) to deduct tax at the earlier of credit or payment on sums for carrying out work (including supply of labour), commission or brokerage (excluding insurance commission), and fees for professional services. The Finance Bill proposes to reduce the prescribed withholding rate under Section 194M, with the amendment effective from 1 October 2024 as Clause 60.

TDS on e-commerce transactions reduced to align with offline parity under the Finance Bill amendment.
Section 194-O obliges an e-commerce operator to deduct tax at source on the gross amount of sales or services when that amount is credited to an e-commerce participant's account or paid, whichever is earlier. The Finance Bill proposes reducing the operator's TDS rate to achieve parity with lower rates applicable to comparable offline provisions, with an effective date specified in the Bill.

TDS on mutual fund unit repurchase proposed to be omitted under section 194F, simplifying taxation of capital gains.
Proposal deletes section 194F, removing the TDS obligation on payments for repurchase of units by mutual funds and UTI as part of capital gains tax rationalisation; the amendment takes effect from the first day of October under the Finance (No.2) Bill, 2024 (Clause 55).

Tax credit for collected or deducted tax: salaried employees may use such credits to reduce salary TDS, easing compliance.
Amendment modifies the rule for computing tax to be deducted from salary so that any tax deducted or collected under the statutory collection-at-source and related withholding regimes is taken into account when determining salary tax deduction, thereby reducing cash-flow impacts on employees and the need to claim refunds; effective from 1 October 2024.

Interest on TCS increased to align with TDS parity, raising monthly simple interest for late remittance to government account.
The Bill amends section 206C(7) to increase the simple interest rate for failure to remit tax collected at source from one percent to one and one-half percent per month or part thereof, calculated from the date of collection until actual payment to the Government; the amendment is prospective and effective from 1 April 2025.

Remuneration limit for working partners raised, permitting higher deductible partner compensation starting in the next assessment year.
The Finance Bill raises the allowable deduction threshold for remuneration to working partners under section 40(b)(v), preserving the two-tier structure that gives a more favourable limit on the initial portion of book-profit and a lower ceiling on the balance. The amendment takes effect from 1 April 2025 and applies to assessment year 2025-26 and subsequent years, with deductions permitted only where remuneration is authorised by and accords with the partnership deed.

TCS credit for minor's income: parents may claim tax collected where the minor's income is clubbed with the parent.
Proposal empowers the Board to notify rules permitting allocation of tax collected at source to persons other than the collectee, addressing cases where tax is collected in a minor's name. Credit of a minor's TCS is allowed only when the minor's income is included in the parent's total income under the income clubbing rule, thereby conditioning credit on that inclusion and providing safeguards against misuse.

Taxation of buy-back proceeds treated as deemed dividend, with capital loss carry-forward to offset future gains.
Sums paid by a domestic company for purchase of its own shares are proposed to be treated as deemed dividend taxable in the hands of recipient shareholders at applicable rates with no expense deductions; concurrently, the extinguished shares will generate a capital loss (consideration deemed nil less cost of acquisition) which may be carried forward and set off against future capital gains on remaining or subsequently sold shares, preserving the shareholder's original cost of acquisition for later capital gains computation.

Securities Transaction Tax increase expands levy on options and futures, broadening the taxable derivative market from the Bill's commencement.
The Finance (No.2) Act, 2004 is amended to increase Securities Transaction Tax rates: the levy on sale of an option in securities is increased to a higher rate of the option premium and the levy on sale of a futures in securities is increased to a higher rate of the traded futures price. Recognised stock exchanges, specified funds, insurers and lead merchant bankers remain responsible for collecting STT and remitting it to the Central Government within the prescribed monthly timeline. The amendment responds to the growth of derivative trading and is set to commence on the Bill's stated future effective date.

Income from house property: rental receipts must be reported under that head, not as business income, tightening tax base.
Amendment clarifies that income from letting out a residential house or part thereof shall be chargeable under Income from House Property and not under Profits and Gains of Business or Profession, to prevent misclassification of rental receipts and tighten the tax base.

Gift transfers of capital assets now exempt only when made by individuals or Hindu undivided families, narrowing the prior exclusion.
The amendment restricts the exclusion from capital gains chargeability for transfers by gift, will or irrevocable trust so that it applies only where the transferor is an individual or a Hindu undivided family, thereby preventing use of gift transfers by companies to avoid capital gains tax and aligning the non-recognition rule with fair market value anti-avoidance provisions; the substitution applies prospectively to the announced assessment year and subsequent years.

TDS on partner payments introduced: firms must deduct on salary, remuneration, interest and commissions paid to partners.
A new provision imposes TDS on partnership firms for payments to partners - salary, remuneration, commission, bonus and interest - including amounts credited to capital accounts, where aggregate payments to a partner in a financial year exceed a specified threshold; the applicable rate is ten percent and the provision takes effect from the commencement of the stated financial year.

Tax collection at source on luxury goods expanded to cover notified high-value goods, enhancing tracking and widening the tax base.
Amendment expands the Tax Collection at Source provision that applies to high-value motor vehicle sales to include other notified high-value luxury goods; sellers must collect TCS from buyers on notified goods exceeding the prescribed value threshold at the rate specified by law, to enhance tracking of luxury expenditure and to widen and deepen the tax base, effective from 1 January 2025.

TDS on immovable property transfers: aggregate consideration across parties triggers deduction, curbing avoidance by splitting payments.
Amendment clarifies that for deduction under section 194-IA the consideration, and thus the threshold exemption and deduction obligation, is the aggregate amount paid or payable where more than one transferor or transferee is involved, countering treatment of individual buyer payments in isolation and addressing related tax avoidance.

Tax deduction at source on interest payments for floating rate savings bonds now applies, expanding the tax base and anti-avoidance.
Amendment to Section 193 mandates deduction of tax at source at the time of payment of interest to residents where interest exceeds the prescribed threshold, specifically covering Floating Rate Savings (Taxable) Bonds (FRSB) 2020 and any Central or State Government security as may be specified by the Central Government; the amendment is effective from 1 October 2024.

Non admissible business expenses: added back to life insurance profits, tightening deductions from assessment year 2025-26.
Amendment to Rule 2 of the First Schedule mandates that any expenditure not admissible under section 37 shall be included (added back) to the profits and gains of life insurance business, supplementing the actuarial surplus based computation and preventing misuse of deductions. The change takes effect from 1 April 2025 and applies from assessment year 2025 26.