23 July 2024 Punjab Khabarnama : To rationalise tax deducted at source (TDS) rates, Finance Minister Nirmala Sitharaman has proposed to withdraw the 20 percent TDS rate on the repurchase of units by mutual funds or UTI.
The Finance Bill 2024 seeks to omit Section 194F of the Income-tax Act relating to payments on account of the repurchase of units by Mutual Fund or Unit Trust of India.
According to Section 194F, the person responsible for paying to any person any amount referred to in sub-section (2) of section-80CCB at the time of payment should deduct income tax at the rate of 20 percent.
According to Feroze Azeez, Deputy Chief Executive Officer, Anand Rathi Wealth, the withdrawal of the 20 percent TDS rate on mutual fund unit repurchase marks a step towards easing the tax burden for investors.
“This aligns with the overall budget’s focus on inclusive growth, employment generation, and infrastructure development, aimed at creating ample opportunities and fostering a resilient economy,” he said.
According to S Vasudevan, Executive Partner, Lakshmikumaran & Sridharan, pursuing the agenda of simplification and ease of doing business, finance minister has announced a comprehensive review of the Income Tax Act, 1961 within next 6 months.
“As an immediate measure, the budget has proposed simplifying the tax structure for charities, rationalizing tax rates for TDS & Capital Gains, simplifying provisions related to reassessment and decriminalization of certain offences for TDS,” said Vasudevan.
Meanwhile, the Union Budget for 2024-25 has hiked the long-term capital gains tax (LTCG) on all financial and non-financial to 12.5 percent from 10 percent, while short-term capital gains tax (STCG) on some assets would be 20 percent.
Further, the exemption limit for long-term capital gains tax has been increased to Rs 1.25 lakh from Rs 1 lakh. The budget also announced that listed financial assets held for more than a year will be classified as long-term.