Reduction in TDS & TCS rates due to COVID-19

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Due to COVID-19 many changes has been made to save economy and remove the burden on the taxpayers on 13 May 2020 the same circular has ...

Reduction in TDS & TCS rates due to COVID-19

Due to COVID-19 many changes has been made to save 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. 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 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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Saral Tax India: Reduction in TDS & TCS rates due to COVID-19
Reduction in TDS & TCS rates due to COVID-19
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