TDS rate for e-commerce operators reduced from 1% to 0.1%

Finance Minister Nirmala Sitharaman, in her presentation of the Union Budget for the fiscal year 2024-25, introduced several key changes, marking the beginning of Prime Minister Narendra Modi’s third term in office. This Budget also marks Sitharaman’s seventh consecutive presentation, surpassing the previous record of former Prime Minister Morarji Desai.

Highlights of the budget speech:

• Digital services:All key taxpayer services will be digitalized to streamline processes and increase efficiency.
• New initiatives:
  • Vivaad Se Vishwas Scheme 2024 has been launched to resolve tax disputes and reduce litigation.
  • The amount limits for filing tax appeals will be increased.
  • Angel tax is abolished for all types of investors in order to ease investment regulations.
• Simplified tax system:
  • A simplified tax system has been proposed for the cruise industry.
  • Corporate tax for foreign companies is reduced to 35%.
• Tax adjustments:
  • Long-term capital gains (LTCG) tax limit increases from 10% to 12.5%.
  • The TDS rate for e-commerce operators is reduced from 1% to 0.1%.
• Income Tax Act Review:Sitharaman announced a comprehensive review of the Income Tax Act, 1961, aimed at reducing disputes and litigation. The review is expected to be completed within six months.
• Exemptions from customs duties and taxes:
  • A review of the customs duty structure is planned for the next six months.
  • The Budget proposes merging two tax relief schemes for charities and decriminalising late TDS payments until the date a tax return is filed.

These measures aim to simplify tax systems, improve digital services and support business investment and growth, while also addressing key issues related to tax compliance and dispute resolution.