New Delhi: Soon your deposits will attract a lower tax deduction at source (TDS), if the government accepts the recommendations of Justice (rtd) R.V. Easwar Committee on the simplification of income-tax laws.
The committee on Monday recommended that the TDS rates for individuals be reduced to five per cent as against the present 10 per cent.
It also recommended levying lower short-term capital gains tax (SCGT) on annual earning of less than Rs 5 lakh to encourage people to invest in stock markets. The panel said that the income from share trading below Rs 5 lakh should not be considered as the business income.
The committee recommended that TDS of five per cent should be applicable if interest earned by an individual on bank deposit or private deposit is over Rs 15,000. The current threshold for bank deposits is Rs 10,000 and private deposits Rs 5,000 — beyond which a TDS of 10 per cent is levied.
A 20 per cent TDS is deducted if the interest earned from the National Saving Scheme is over Rs 2,500. The committee has recommended that a five per cent TDS be imposed if withdrawal is above Rs 15,000. The five per cent TDS will apply if the interest on securities is more than Rs 15,000. Currently, 10 per cent tax is deducted at source if the interest on securities is over Rs 2,500.
This move will help senior citizens who have to pay TDS even if they are not liable to pay income-tax and have to go through the tedious process to get a refund.
“It is a matter of record that a number of annual threshold limits in respect of TDS have just not come to be revised over the years,” said the report, adding that the committee halved the TDS as 80 percent payers come under the less than five per cent tax bracket.
The limit on rent income threshold for TDS is proposed to be raised from Rs 1.8 lakh annually to Rs 2.4 lakh. The threshold for fees for professional or technical services is recommended to be raised to Rs 50,000 from Rs 30,000 but TDS rate is proposed to be retained at 10 per cent.
