• Notification Date: 15-03-2023
• Notification No: N/A

Major TDS Changes applicable from April 1

The Union Budget 2023 had proposed various changes in Tax Deducted at Source (TDS) rules, which will be effective from the new financial year starting April 1, 2023. The Income Tax Department recently released the “Highlights of Finance Bill, 2023,” which outlines the list of TDS rules proposed to change in Budget 2023. Here are the key TDS changes that you should keep an eye out for: TDS on winnings from online gaming will be imposed without any threshold benefit. The tax will be deducted either at the time of withdrawal or at the end of the financial year. The exemption from TDS available on interest payments on listed debentures will be removed. 

If the recipient of EPF withdrawal fails to provide their PAN, then TDS on the withdrawal will be 20%, instead of the maximum marginal rate. 

Sections 206AB and 206CCA have been amended to exclude certain persons who are not required to file a return of income and are notified by the government. For specific income paid to non-residents or foreign companies, TDS will be deducted at a rate of 20% or the rate specified in a tax treaty, whichever is lower. This relief will be available if the payee provides a tax residency certificate. Section 155 has been modified to resolve a TDS mismatch problem. “When a taxpayer reports income using the accrual method, it may be taxed before the TDS is deducted. It causes a TDS mismatch and prevents the taxpayer from claiming TDS credit. The amendment in section 155 allows taxpayers to apply to the Assessing Officer within two years of the financial year in which the tax was withheld,” the Income Tax Department explains. 

“The Assessing Officer will then amend the assessment to enable the taxpayer to claim TDS credit. Section 244A has also been amended to provide that the interest on refund arising out of the above rectification shall be for the period from the date of the application to the date on which the refund is granted,” it adds.