Reduction in TDS & TCS rates
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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%
2 194 Dividend 10% 7.5%
3 194A Interest other than interest on securities 10% 7.5%
4 194C Payment of Contractors & sub- contractors 1% (individual/HUF)

2% (others)

 0.75% (individual/HUF)

1.5% (others)
5 194D Insurance Commission 5% 3.75%
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)

10% (others)

 1.5% (FTS, certain royalties, call center)

7.5% (others)
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)

30% (Others)

 18.75(Individual/HUF)

22.5%(Others)
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%
(e) scrap 1% 0.75%
(f) Minerals, being coal or lignite or iron ore 1% 0.75%
206C(1C) Grant of license, lease, etc. of

(a) Parking lot

 2% 1.5%
(b) Toll Plaza 2% 1.5%
(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%

Important Points

  • 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.