Budget 2024-25 proposes Withdrawal of 20% TDS rate on repurchase by Mutual Funds and UTI [Read Bill]

The Budget 2024-25 proposes the withdrawal of the 20% TDS rate on repurchase transactions conducted by mutual funds and UTI.

The Union Finance Minister Nirmala Sitharaman presented the full budget for 2024 before Parliament at 11 a.m. on Tuesday.

India’s Finance Minister Nirmala Sitharaman announced the simplification of taxation rules through the Tax Deducted at Source (TDS) rate structure in the Budget 2024 announcement.

To rationalize mutual funds (TDS) rates, Finance Minister Nirmala Sitharaman has announced to withdraw the 20 percent TDS rate on the repurchase of units by mutual funds or UTI.

The TDS rates under the payment in respect of life insurance policy, payment of insurance commission, commission etc on sale of lottery tickets, payment of commission or brokerages, payment of rent by individual or Hindu undivided family (HUF), payment of certain sums by certain individuals or HUF, payment of certain sums by e-commerce operator to e-commerce participants, are proposed to be reduced to 2 per cent from 5 per cent.

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.

Notably, the 20 per cent TDS rate on repurchasing units through mutual funds or Unit Trust of India (UTI) is now being withdrawn.

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