In this post, we will look into the new update regarding the reduction in TDS and TCS rates amidst this COVID-19.
We will see the following topics:
Reduction in the TDS rates
Tax Deduction at Source (TDS) rates for the non-salaried specified payments made to residents has been reduced to 25% for 14th May 2020 to 31st March 2021.
You can find the changes in the table below:
|Sl. No.||Section||Payment method||Existing TDS Rate||Reduced rate from 14/05/2020 to 31/03/2021|
|1||193||Interest on Securities||10%||7.5%|
|3||194A||Interest other than interest on securities||10%||7.5%|
|4||194C||Payment of Contractors & sub- contractors||1% (individual/HUF)
|6||194DA||Payment in respect of life insurance policy||5%||3.75%|
|7||194EE||Payments in respect of deposits under National Savings Scheme||10%||7.5%|
|8||194F||Payments on account of re-purchase of Units by Mutual Funds or UTI||20%||15%|
|9||194G||Commission, prize etc., on sale of lottery tickets||5%||3.75%|
|10||194H||Commission or brokerage||5%||3.75%|
|11||194-I(a)||Rent for plant and machinery||2%||1.5%|
|12||194-I(b)||Rent for immovable property||10%||7.5%|
|13||194-IA||Payment for acquisition of immovable property||1%||0.75%|
|14||194-IB||Payment of rent by individual or HUF||5%||3.75%|
|15||194-IC||Payment for Joint Development Agreements||10%||7.5%|
|16||194J||Fee for Professional or Technical Services (FTS), Royalty, etc.||2% (FTS, certain royalties, call center)
|1.5% (FTS, certain royalties, call center)
|17||194K||Payment of dividend by Mutual Funds||10%||7.5%|
|18||194LA||Payment of Compensation on acquisition of immovable property||10%||7.5%|
|19||194LBA(1)||Payment of income by Business trust||10%||7.5%|
|20||194LBB(i)||Payment of income by Investment fund||10%||7.5%|
|21||194LBC(1)||Income by securitisation trust||25(Individual/HUF)
|22||194M||Payment to the commission, brokerage, etc. by Individual and HUF||5%||3.75%|
|23||194-O||TDS on e-commerce participants||1%(w.e.f.1.10.2020)||0.75%|
Reduction in TCS rates
Tax Collection at Source (TCS) rate for some specified receipts is reduced by 25% from 14th May 2020 to 31st March 2021.
You can check out the below table for the same:
|Section||Nature of Receipts||Existing TCS Rate||Reduced rate from 14/05/2020 to 31/03/2021|
|206C(1)||Sale of (a) Tendu Leaves||5%||3.75%|
|(b)||Timber obtained under a forest lease||2.5%||1.875%|
|(c)||timber obtained by any other mode||2.5%||1.875%|
|(d)||Any other forest produce not being timber/tendu leaves||2.5%||1.875%|
|(f)||Minerals, being coal or lignite or iron ore||1%||0.75%|
|206C(1C)||Grant of license, lease, etc. of
(a) Parking lot
|(c)||Mining and quarrying||2%||1.5%|
|206C(1F)||Sale of motor vehicle above 10 lakhs||1%||0.75%|
|206C(1H)||Sale of any other goods||0.1% (w.e.f 01.10.2020)||0.075%|
- TDS on the paid/credited amount from 14th May 2020 to 31st March 2021 will be deducted at the reduced rates.
- TCS on the received/debited amount from 14th May 2020 to 31st March 2021 is collected at the reduced rates.
- When tax is deducted/collected at a higher rate when PAN/Aadhaar is not submitted, no reduction in TDS or TCS rates.
With that, we have come to the end of this post. Share your queries with us in the comment section below.