TDS deduction new rule: The government has made a big change in the rules for TDS deduction on salary. Now the benefit of TDS/TCS deducted on non-salary income (such as bank interest, rent, etc.) will be given while deducting TDS on salary. This will eliminate the hassle of double tax deduction on salaried employees and reduce their tax liability.
What has changed?
Earlier, salaried employees had to pay TDS separately on non-salary income along with their salary. But now the new rule says that:
TDS will be deducted on salary taking into account TDS/TCS already deducted on non-salary income.
This will reduce the total TDS of salaried employees.
Understand with an example:
If your salary is ₹ 10 lakh and non-salary income is ₹ 5 lakh, on which TDS / TCS has already been deducted, then earlier TDS was deducted on the entire income of ₹ 15 lakh. Now TDS will be deducted on the income of ₹ 10 lakh by adjusting the TDS deducted on ₹ 5 lakh from ₹ 15 lakh.
Benefits of the new rule:
Problem of double TDS deduction is over:
Now salaried employees can immediately take advantage of the TDS already deducted on their non-salary income.
Cash flow improves:
The problem that employees used to face due to extra tax deduction will no longer happen.
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Changes in TDS certificate:
The TDS software has been updated from December 27, 2024. From Q4 (January 2025), salaried employees will start getting the correct TDS certificate.
Chartered Accountants’ Opinion
Mihir Tanna, S.K. Patodia LLP:
“Earlier, employees had to pay TDS twice on non-salary income. Now this problem is over. This rule will solve the cash problem of employees.”
Himank Singla, SBHS & Associates:
“This rule makes the tax system simpler and taxpayer-friendly. Now there will be no double tax burden.”
Ashish Niraj, ASN & Co:
“This change will also improve Form 24Q and Form 16, making TDS more accurate.”
When will the change be implemented?
October 1, 2024: The new rule comes into effect.
January 2025: Changes will start appearing in Q4 TDS certificates.
