CBDT Eases TDS Rules, Amends LTCG Tax: Slight Relief for Battered Taxpayers

The Central Board of Direct Taxes (CBDT) has eased the provisions of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) in the event of the death of the deductee or collectee, before the linkage of PAN and Aadhaar. This decision was announced in an official statement issued on August 7, 2024.

The CBDT, in its circular dated August 5, 2024, addressed the grievances of taxpayers who cited instances of the demise of the deductee or collectee on or before May 31, 2024, and before the option to link PAN and Aadhaar could have been exercised. The circular provides that there shall be no liability on the deductor or collector to deduct or collect the tax under section 206AA/206CC of the Act, as the case may be, pertaining to the transactions entered into up to March 31, 2024.

This move by the CBDT is in response to the genuine difficulties being faced by taxpayers. The government has relaxed the provisions of TDS/TCS as per the Income-tax Act, 1961, in the event of death of deductee or collectee before linking of PAN and Aadhaar.

This decision is a continuation of Circular No. 6 of 2024 issued earlier by the CBDT wherein the date for linking of PAN and Aadhaar was extended up to May 31, 2024, for the taxpayers to avoid higher TDS or TCS as per the Act. The CBDT’s decision to relax TDS/TCS provisions in the event of the death of the deductee or collectee is a significant move that addresses the genuine difficulties faced by taxpayers.

In addition to this, the government has also introduced an amendment to the long-term capital gains (LTCG) tax on real estate transactions. This move has been hailed by industry experts as it offers flexibility for sellers. The government, paying heed to the industry’s demand, moved an amendment to the Finance Bill 2024, to allow taxpayers to select either a 12.5 per cent long-term capital gains (LTCG) tax rate without indexation or a 20 per cent rate with indexation for property acquired before July 23 this year.

Experts believe this amendment is expected to stimulate investment and sales in the housing market by potentially reducing the tax burden on sellers. Historically, the government has taken similar steps to ease the tax burden on taxpayers. For instance, in the past, the CBDT has extended the deadline for linking PAN and Aadhaar in response to the difficulties faced by taxpayers.

This recent move is in line with the government’s ongoing efforts to simplify tax compliance and reduce the burden on taxpayers. These decisions are expected to bring relief to taxpayers and stimulate investment in the housing market.

The CBDT’s decision to relax TDS/TCS provisions in the event of the death of the deductee or collectee, and the amendment to the LTCG tax on real estate transactions, are significant steps towards easing the tax burden on taxpayers. These decisions, taken in response to the genuine difficulties faced by taxpayers, are expected to stimulate investment in the housing market and bring relief to taxpayers.