Industrial bodies ask finance ministry to reduce TDS rates for Union Budget 2025: Report

Industrial bodies have requested the finance ministry to simplify tax deducted at source (TDS) rates for the Union Budget to be presented in February next year. Business Standard reported. This was to reduce the compliance burden on taxpayers and also prevent lawsuits.

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Why do TDS rates need to be simplified?

There are currently 37 types of payments available to residents under the Income Tax Act, with TDS rates ranging from 0.1% to 30%.

According to the report, this often results in disagreements over classification and interpretation; According to the report, it is stated that cash flow to the sector is also blocked and the government may have to pay interest on repayments.

What are the recommendations of industrial organizations?

“The government has made a good start in the simplification process by reducing TDS rates on various payments from 5 per cent to 2 per cent through the Finance Bill, 2024 (No. 2),” the report said in FICCI’s presentation. It is proposed to have only three rate structures for TDS payments – TDS at slab rate in salary, lottery/online games etc. at maximum marginal rate. TDS on and two standard rates for TDS for different categories.

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According to the report, CII has also made a similar suggestion, asking for payments in two to three categories and a small negative list with no obligation to pay TDS.

CII also said that TDS for salaried class could be at normal rates while for lottery and horse racing winnings it could be 30%. It was stated that existing TDS sections with rate below 5 per cent can continue with existing rates, all other payments can be taxed between 2-4 per cent, while payments made to senior citizens and charities can be included in the exemption list.

According to the report, FICCI also advocated for an independent dispute resolution forum comprising experts. “Time-bound resolution by an independent forum will build confidence among taxpayers who can come forward to resolve matters rather than litigate for fear of penalties and prosecution,” the report said. locked due to this type of case.”

Meanwhile, the PHD Chamber of Commerce and Industry (PHDCCI) advocated for the abolition of securities transactions tax.

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