The Central Board of Direct Taxes (CBDT) has delivered on key budget promises for 2024-25, introducing measures to simplify tax processes for charities and rationalize Tax Deducted at Source (TDS) rates. These reforms aim to streamline compliance and enhance clarity for both organizations and taxpayers.
Key Announcements:
- Merging of tax exemption regimes:
- Two tax exemption schemes for charities have been merged into a single scheme to provide better clarity and ease of operation.
- Streamlined timelines for registration and approval processes for charitable trusts and institutions have been introduced.
- TDS and TCS rationalization:
- The 5% TDS rate on several payments has been merged into the 2% rate.
- The 20% TDS rate on the repurchase of mutual fund or UTI units is being withdrawn.
- The TDS rate for e-commerce operators under Section 194-O has been reduced from 1% to 0.1%.
- Credit for TCS (Tax Collected at Source) will now be taken into account when deducting TDS on salaries under Section 192(1).
- Section 192(2B) has been amended to include all types of TDS or TCS for better integration.
- Decriminalization and standardization:
- Section 276B of the Income Tax Act, 1961, has been amended to decriminalize delays in the payment of TDS, provided payments are made before the due date of filing the statement.
- A standardized operating procedure for addressing TDS defaults has been proposed to simplify and rationalize the compounding guidelines for such defaults.
- Refund process improvement:
- Employees can now claim refunds for TCS directly in their respective Income Tax Returns (ITR), streamlining the process and mitigating cash flow issues.
These measures are expected to reduce compliance burdens, enhance cash flow management for taxpayers, and improve operational efficiency for charitable organizations. Additionally, they underscore the government’s focus on fostering a simpler and more inclusive tax environment.
The changes reflect a broader push to modernize tax administration and make the system more taxpayer-friendly, benefiting both individuals and institutions across the country.
