The Hon’ble Finance Minister (FM) has presented Union Finance Budget on February 01, 2020 which was then passed by parliament on March 27, 2020 as Finance Act, 2020. Vide the Budget FM has made various changes in the TDS and TCS provisions.
Two New TDS Sections i.e. Section 194K and Section 194O (applicable from October 1, 2020) which provides TDS on Mutual Fund Income and TDS on E-Commerce Transactions.
Changes in few existing sections of TDS has also been proposed which includes amendment in Section 194J by which TDS on Technical Services has been reduced to 2%. As there were lot of litigations and ambiguity for rate of TDS in case of TDS under section 194C and 194J for technical services and so to remove future litigations or ambiguity, the rate of TDS on technical services under section 194J have been reduced to 2% from 10% in the previous assessment year.
Further, to cover the assessees who are not filling income tax return and withdrawing cash of more than Rs.20 Lakhs, an amendment in section 194N is made which will be applicable from July 1, 2020.
A summarised presentation of the applicable important TDS rates has been enumerated in the below table:
|Section||Nature||Rate of TDS||Monetary Limit (RS.)|
|192||Salary||According to Slab Rate||According to Slab Rate|
|194A||Interest Other Interest on Securities||10%||5,000|
|194C||Payment to Contractor / Sub Contractor||1% for payment to Individual/ HUF
2% for Others
|30,000 for Individual Contract
1,00,000 in Aggregate
|194H||Commission / Brokerage||5%||15,000|
|194I||Rent||10% for Payment of rent for Land & Building 2 % for Payment of Rent for Plant & Machinery||2,40,000|
|194IA||Payment on purchase of Immovable Property||1%||50,00,000|
|194J||Payment for fees for Technical & Professional Services||10% for Payment of Professional Fees
2 % for Payment of technical services *Amendment
|195||Payment to Non Residents||As applicable tax under income tax on that nature of income||–|
Under section 206C two new subsections (1G) & (1H) has been inserted which will be applicable from October 1, 2020.
(a) being an authorised dealer, who receives an amount, or an aggregate of amounts, of seven lakh rupees or more in a financial year for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalised Remittance Scheme of the Reserve Bank of India;
(b) being a seller of an overseas tour program package, who receives any amount from a buyer, being the person who purchases such package, shall, at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the said buyer, by any mode, whichever is earlier, collect from the buyer, a sum equal to five per cent. of such amount as income-tax:
Provided that the provisions of this sub-section shall not apply, if the buyer is,––
(i) liable to deduct tax at source under any other provision of this Act and has deducted such amount;
(ii) the Central Government, a State Government, an embassy, a High Commission, a legation, a commission, a consulate, the trade representation of a foreign State, a local authority as defined in the Explanation to clause (20) of section 10 or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.
Provided that if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words “five per cent.”, the words “one per cent.” had been substituted:
Provided further that the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act and has deducted such amount.