Reduction in TDS & TCS rates due to COVID-19 Due to COVID-19, many changes have been made to save the economy and remove the burden on the taxpayers..
Reduction in TDS & TCS rates due to COVID-19
Due to COVID-19, many changes have been made to save the economy and remove the burden on the taxpayers on 13 May 2020 the same circular has been issued in this respect to effect changes in 25% reduction in TDS and TCS rates. The schedule can be seen below:
Reduced rate from 14/05/2020 to 31/03/2021| S. No | Section | Nature of Payment | Existing TDS Rate | New Rates |
|---|---|---|---|---|
| 1 | 193 | Interest on Securities | 10% | 7.50% |
| 2 | 194 | Dividend | 10% | 7.50% |
| 3 | 194A | Interest other than interest on securities | 10% | 7.50% |
| 4 | 194C | Payment of Contractors and sub-contractors (individual/HUF) | 1% | 0.75% |
| 4.1 | 194C | Payment of Contractors and sub-contractors (others) | 2% | 1.50% |
| 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 the National Savings Scheme | 10% | 7.50% |
| 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% | 1.50% |
| 12 | 194-I(b) | Rent for immovable property | 10% | 7.50% |
| 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% | 7.50% |
| 16 | 194J | Fee for Professional or Technical Services (FTS), Royalty, etc. (FTS, certain royalties, call centre) | 2% | 1.50% |
| 16.1 | 194J | Fee for Professional or Technical Services (FTS), Royalty, etc. (others) | 10% | 7.50% |
| 17 | 194K | Payment of dividend by Mutual Funds | 10% | 7.50% |
| 18 | 194LA | Payment of Compensation on acquisition of immovable property | 10% | 7.50% |
| 19 | 194LBA(1) | Payment of income by Business trust | 10% | 7.50% |
| 20 | 194LBB(i) | Payment of income by Investment fund | 10% | 7.50% |
| 21 | 194LBC(1) | Income by securitisation trust (Individual/HUF) | 25% | 18.75% |
| 21.1 | 194LBC(1) | Income by securitisation trust (Others) | 30% | 22.50% |
| 22 | 194M | Payment to commission, brokerage etc. by Individual and HUF | 5% | 3.75% |
| 23 | 194-O | TDS on e-commerce participants (w.e.f. 1.10.2020) | 1% | 0.75% |
Further, the rate of Tax Collection at Source (TCS) for the following specified receipts has also been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021:-
| S. No | Section | Nature of Receipts | Existing TDS Rate | New Rates |
|---|---|---|---|---|
| 1 | 206C(1) | Sale of | ||
| 1.1 | 206C(1) | (a) Tendu Leaves | 5% | 3.75% |
| 1.2 | 206C(1) | (b)Timber obtained under a forest lease | 2.50% | 1.88% |
| 1.3 | 206C(1) | (c) timber obtained by any other mode | 2.50% | 1.88% |
| 1.4 | 206C(1) | (d) Any other forest produce not being timber/tendu leaves | 2.50% | 1.88% |
| 1.5 | 206C(1) | (e) scrap | 1% | 0.75% |
| 1.6 | 206C(1) | (f) Minerals, being coal or lignite or iron ore | 1% | 0.75% |
| 2 | 206C(1C) | Grant of license, lease, etc. of | ||
| 2.2 | 206C(1C) | (a) Parking lot | 2% | 1.50% |
| 2.3 | 206C(1C) | (b) Toll Plaza | 2% | 1.50% |
| 2.4 | 206C(1C) | (c) Mining and quarrying | 2% | 1.50% |
| 3 | 206C(1F) | Sale of motor vehicle above 10 lakhs | 1% | 0.75% |
| 4 | 206C(1H) | Sale of any other goods | 0.1% (w.e.f 01.10.2020) | 0.75% |
Note: It should be noted the rate of TDS/TCS shall be the same in the following situations:
a) Where tax is deductible from salary or provident fund under Section 192 or Section 192A respectively
b) Where the sum is paid or payable to a non-resident person.
d) Where a resident person does not furnish his PAN or Aadhaar and the tax is deductible at a higher rate under Section 206AA or Section 206CC, as the case may be.
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