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TDS Rules for Salaried Individuals as per Budget 2024

The Union Budget 2024 introduced several significant changes in the tax deduction at source (TDS) on salary, specifically under the new tax regime. While the old regime remains unchanged, the new regime has undergone various amendments aimed at providing relief to taxpayers. Below are the key changes and their implications.

 

New Tax Regime

The new tax regime has revised the slab rates for the financial year 2024-25. The updated slabs are as follows:

 

Income Range (₹) Tax Rate (%)
Up to 3,00,000 Nil
3,00,001 to 7,00,000 5%
7,00,001 to 10,00,000 10%
10,00,001 to 12,00,000 15%
12,00,001 to 15,00,000 20%
Above 15,00,000 30%

Increase in Standard Deduction

The standard deduction has been increased from ₹50,000 to ₹75,000 under the new regime.

Increase In Exemption of Family Pension:

The deduction u/s 57 increased from 15000 to 25000 under New Tax Regime

Employer’s Contribution to Pension Fund

The limit for the employer’s contribution to the pension fund under Section 80CCD(2), which is allowed as a deduction under both the old and new regimes, has been increased from 10% to 14% of the salary.

TDS Deduction Based on TCS Collection : Change in section 192

 

A new provision has been introduced where if TCS (Tax Collected at Source) is collected from an employee on any transaction and the employee declares this to the employer, the employer must consider this TCS for TDS deduction on salary. Previously, only TDS deducted was considered by the employer.

Old Tax Regime

For Individuals Below 60 Years

  • Up to ₹2.5 lakh: Nil
  • ₹2,50,001 to ₹5 lakh: 5%
  • ₹5,00,001 to ₹10 lakh: 20%
  • Above ₹10 lakh: 30%

For Senior Citizens (60 to 80 Years)

  • Up to ₹3 lakh: Nil
  • ₹3,00,001 to ₹5 lakh: 5%
  • ₹5,00,001 to ₹10 lakh: 20%
  • Above ₹10 lakh: 30%

For Super Senior Citizens (Above 80 Years)

  • Up to ₹5 lakh: Nil
  • ₹5,00,001 to ₹10 lakh: 20%
  • Above ₹10 lakh: 30%

Rebate u/s 87A:

This is available only to Resident individual, not to non resident individual or any other person.

Rebate is allowed:

Under Old Tax Regime: only if total income is not exceeding Rs.500000, Rebate shall be allowed upto Rs.12500

Under New Tax Regime: only if total income is not exceeding Rs.700000, Rebate shall be allowed upto Rs.25000

Note:

  • Rebate shall not be allowed from LTCG u/s 112A
  • Not Allowed to HUF
  • Not allowed to NR
  • Allowed for LTCG/STCG u/s 111A, Casual Income ex. Lottery – under Old Regime Only

Examples to Illustrate the Changes

Example 1: Standard Deduction and New Slab Rates

Scenario:

  • Annual salary: ₹12,00,000
  • Applicable under the new regime

Calculation:

  1. Gross Salary: ₹12,00,000
  2. Standard Deduction: ₹75,000
  3. Taxable Income: ₹12,00,000 – ₹75,000 = ₹11,25,000

Tax Computation:

  • Up to ₹3,00,000: Nil
  • ₹3,00,001 to ₹7,00,000: 5% of ₹4,00,000 = ₹20,000
  • ₹7,00,001 to ₹10,00,000: 10% of ₹3,00,000 = ₹30,000
  • ₹10,00,001 to ₹11,25,000: 15% of ₹1,25,000 = ₹18,750

Total Tax Payable:

  • ₹20,000 + ₹30,000 + ₹18,750 = ₹68,750

So TDS to be deducted in whole year based on this in equal amount.

Example 2: TDS Deduction Considering TCS

Scenario:

  • Annual salary: ₹10,00,000
  • TCS collected: ₹5,000
  • Employee declares TCS to the employer

Calculation:

  1. Gross Salary: ₹10,00,000
  2. Standard Deduction: ₹75,000
  3. Taxable Income: ₹10,00,000 – ₹75,000 = ₹9,25,000

Tax Computation:

  • Up to ₹3,00,000: Nil
  • ₹3,00,001 to ₹7,00,000: 5% of ₹4,00,000 = ₹20,000
  • ₹7,00,001 to ₹9,25,000: 10% of ₹2,25,000 = ₹22,500

Total Tax Payable:

  • ₹20,000 + ₹22,500 = ₹42,500

TDS Deduction Adjustment:

  • TCS Declared: ₹5,000
  • Adjusted TDS Deduction: ₹42,500 – ₹5,000 = ₹37,500

So TDS to be deducted in whole year based on this in equal amount.

The Budget 2024 has introduced several changes aimed at providing relief to taxpayers under the new tax regime. The increase in standard deduction, revised tax slab rates, higher deduction limits for employer contributions to pension funds, and adjustments for TCS collection are significant steps towards simplifying tax compliance and providing financial benefits to salaried individuals. Taxpayers should ensure their employers are informed about TCS collections to benefit from accurate TDS deductions on salary.

Understanding Debit Notes and Their Use

A debit note is a financial document that serves as a form of communication between a buyer and a seller. It is used to notify the seller of an adjustment that needs to be made to an invoice or a payment. In simpler terms, a debit note is a way to indicate that a certain amount needs to be deducted from the seller’s account.

Why is a Debit Note Used?

A debit note is typically used in situations where there is a discrepancy or an error in an invoice. It allows the buyer to request a refund or a reduction in the amount owed to the seller. This can occur for various reasons, such as:

  • Goods being returned or rejected by the buyer
  • Incorrect pricing or quantity on the invoice
  • Overcharging by the seller
  • Discounts or rebates that were not applied

By using a debit note, the buyer can provide a clear and documented explanation of the adjustment that needs to be made. This helps to ensure that both parties are on the same page and can resolve any discrepancies in a fair and transparent manner.

How Does a Debit Note Work?

When a buyer identifies an error or discrepancy in an invoice, they can issue a debit note to the seller. The debit note typically includes the following information:

  • Date of the debit note
  • Buyer’s name and contact information
  • Seller’s name and contact information
  • Invoice number and date
  • Reason for the debit note
  • Amount to be deducted

Once the seller receives the debit note, they can review the information and make the necessary adjustments to their records. This may involve issuing a credit note to the buyer, which serves as a confirmation of the adjustment made.

Benefits of Using a Debit Note

The use of a debit note offers several benefits for both buyers and sellers:

1. Clear Communication:

A debit note provides a clear and concise way to communicate adjustments or discrepancies in an invoice. This helps to avoid misunderstandings and ensures that both parties are aware of the necessary changes.

2. Dispute Resolution:

By using a debit note, buyers and sellers can resolve any disputes or issues related to an invoice in a timely manner. It provides a formal process for addressing discrepancies and finding a resolution that is agreeable to both parties.

3. Financial Accuracy:

Debit notes help to maintain accurate financial records by reflecting any adjustments or corrections that need to be made. This ensures that the books of both the buyer and the seller are up to date and reflect the correct financial position.

4. Legal Protection:

Using a debit note can provide legal protection for both buyers and sellers in case of any future disputes or audits. It serves as a documented record of the adjustments made and can be used as evidence if needed.

In Conclusion

A debit note is a valuable tool for buyers and sellers to communicate and resolve discrepancies in invoices. By using a debit note, both parties can ensure transparency, accuracy, and fairness in their financial transactions.

Understanding Credit Notes and When They Are Required

A credit note is a document issued by a seller to a buyer to acknowledge a reduction in the amount owed by the buyer. It serves as a form of credit memo or a negative invoice that is used to correct errors, resolve disputes, or provide refunds.

There are several situations in which a credit note may be required:

1. Returns or Refunds:

When a buyer returns goods or requests a refund, a credit note is issued to adjust the amount owed by the buyer. This can occur due to various reasons such as damaged goods, incorrect items delivered, or dissatisfaction with the product or service.

2. Pricing Discrepancies:

If there is a discrepancy in the pricing of goods or services, a credit note can be issued to rectify the error. This could be due to incorrect pricing, discounts not applied, or overcharging.

3. Quantity Discrepancies:

If the quantity of goods delivered is different from what was ordered, a credit note may be issued to adjust the amount owed. This can happen when there are shortages or overages in the quantity of goods received.

4. Damaged or Defective Goods:

If goods are received in a damaged or defective condition, a credit note can be issued to compensate the buyer for the inconvenience or to cover the cost of repairs or replacements.

5. Billing Errors:

If there are errors in the billing process, such as duplicate invoicing or incorrect calculations, a credit note can be issued to correct the mistake and adjust the amount owed.

It is important for both buyers and sellers to understand when a credit note is required. By issuing credit notes in a timely manner, businesses can maintain transparency and ensure customer satisfaction.