In its last budget before general election due by May, the government has announced a number of tax changes. Other than some income tax rules, including rebate applicable to personal income, the government has also announced changes to the rules on TDS - or tax deducted at source. TDS or tax deducted at source is a direct tax paid to the government under certain conditions. Deduced by the payer, TDS is aimed at collection of tax from the very source of income.
Here are key things to now about TDS benefits announced in the budget 2019:
TDS on payment of interest income
The interim budget for 2019-20 proposes to raise the threshold of TDS applicable to interest income from bank or post office deposits by four times. As per existing rules, TDS is applicable on interest income above Rs 10,000 from post office/bank deposits. The Finance Bill 2019 proposes to change this threshold to Rs 40,000. This means that TDS won't be applicable to such interest income up to Rs 40,000, instead of Rs 10,000 at present.
The hike in TDS threshold on interest income will benefit small depositors and non-working spouses, the government has said.
TDS on payment of rent
The government has also proposed to increase the TDS threshold applicable to payment of rent by one-thirds. This means that payment of rent up to Rs 2.4 lakh will not attract TDS. As per existing rules, TDS is applicable on payment of rent above Rs 1.8 lakh. In other words, payment of rent above 1.8 lakh attracts TDS at present.