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Larger scope of TDS may hurt your pocket FY 2015-16

From this financial year, the cash flow of individual taxpayers will be impacted as the Budget has widened tax-deduction-at-source (TDS) provisions in many areas. Let us analyse the overall impact of these proposals.

TDS on interest from branches of same bank
At present, banks deduct tax on interest on fixed deposits if the interest for the year is likely to exceed R10,000 with reference to each branch separately and not the bank taken as a whole. This was because, not till long ago, it wasn’t feasible to calculate the limit for a bank as a whole.
Now, almost all banks have moved to the core banking solution and furnishing the Permanent Account Number (PAN) has become mandatory. Hence, it is no longer difficult for the bank as a whole to find out who will earn interest more than R10,000 in year. Accordingly, the Budget has proposed that the limit of R10,000 for TDS will be calculated with reference to the bank as a whole and not for each branch.

TDS on interest on recurring deposits
Currently, no tax is deducted on the interest credited on the recurring deposit account, irrespective of the amount of interest. The Budget has proposed to apply TDS provisions to interest on recurring deposit accounts if the interest exceeds the threshold limit of R10,000.

TDS on premature withdrawal from EPFO
The Budget has proposed that if the amount of premature withdrawal from the Employees’ Provident Fund exceeds R30,000, tax at 10% will be deducted. If PAN details are not furnished, tax at 30% will be deducted. If an individual’s taxable income is not likely to exceed the basic exemption amount, he can furnish Form 15G to avoid TDS. However, TDS provisions are not applicable in case of withdrawal after more than five years of continuous service.

TDS of salary
To ensure that the employer verifies the genuineness of a claim, the Budget has proposed that the employer would collect the documentary proof before granting any exemption or deduction. So, salaried taxpayers would be required to furnish proof for all deduction and exemption or loss under the head income from house property, so that excess tax is not deducted from salaries from the next year and onwards.

Taxing the super-rich
To tax the super-rich in an efficient manner, Budget 2015 has abolished wealth tax, which was introduced in 1957, and increased the surcharge from 10% of income tax to 12%. However, most taxpayers need not worry as the surcharge is applicable to the so-called super-rich persons only, that is, those with annual taxable income above Rs 1 crore.

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  1. So what if larger scope of TDS may hurt the tax payers of India. NAMO will have his POCKETS jingling and his loud MOUTH gurgling and extolling virtues of PAYING LARGER TAXES for the benefit of so-called FARMERS