The Finance Minister Nirmala Sitharaman made an important tax-related announcement in a press conference yesterday. To give more cash in the hands of taxpayers, she disclosed a rate cut of 25% on Tax Collected at Source (TCS) for specified receipts and Tax Deducted at Source (TDS) for non-salaried specified payments made to residents.
Key Points
1. This provision is not applicable to salaried person (Salaried person pay tax as per slab rate)
2. Applicable from 14th may 2020 and up to 31st march 2021.
3. Every TDS rate reduced by 25% excluding Winning from lottery and horse race (sec 194b/bb)
Example- Interest rate -10% (before 14th may)
Interest rate -7.5% (After 14th may)
4. The rate cuts will benefit the professionals, self-employed, and senior citizens who earn interest income and rental income.
5. No Reduction in rate of TDS where the tax is required to be deducted at higher rate due to non furnishing of PAN.
Example– the tax is required to be deducted at 20% under section 206AA of the Income-tax Act due to non-furnishing of PAN.
6. Rate of TDS and TCS not change for Non- Residence of india.
Chart of TDS Rate changes wef 14.05.2020 for financial year 2020-21
| S.no. | Section | Nature of payment | Thres hold Limit | Till 13/05/ 2020 | From 14/05 /2020 to 31/05/ 2020 | If no pan/ Aadhaar or in valid pan |
| Rs. | TDS Rate (%) | TDS Rate (%) | ||||
| 1 | 192 | Salaries | – | Normal slab rate | Normal slab rate | |
| 2 | 192A | Premature withdrawal from EPF | 50000 | 10 | 10 | 30 |
| 3 | 193 | Interest on securities | 10000 | 10 | 7.5 | 20 |
| 193 | Interest on securities – Interest on securities for money issued by or on behalf of any local authority/ statutory corporation, listed debentures of a company (other than demat form), any other interest on securities | Rs. 5000 in case of Individual | 10 | 7.5 | 20 | |
| 4 | 194 | Dividends | 5000 | 10 | 7.5 | 20 |
| 5 | 194A | Interest (Banking co., co-operative society engaged in banking, post office) | 50000 | 10 | 7.5 | 20 |
| 194A | Interest (Any other person) | 5000 | 10 | 7.5 | 20 | |
| 6 | 194C | Contractor-Single transaction-Individual/HUF | 30000 | 1 | 0.75 | 20 |
| -Others | 2 | 1.5 | 20 | |||
| 194C | Contractor – Consolidated Payment During the F.Y. | 100000 | ||||
| – Individual/HUF | 1 | 0.75 | 20 | |||
| – Others | 2 | 1.5 | 20 | |||
| 7 | 194D | Insurance commission – Other than Company | 15000 | 5 | 3.75 | 20 |
| – Company | 10 | 7.5 | 20 | |||
| 8 | 194DA | Maturity of Life insurance policy | 100000 | 5 | 3.75 | 20 |
| 9 | 194E | Non-resident sportsmen or sports association | – | 20 | 20 | |
| 10 | 194EE | NSS | 2500 | 10 | 7.5 | 20 |
| 11 | 194F | Repurchase units by MFs | – | 20 | 15 | 20 |
| 12 | 194G | Commission-Lottery | 15000 | 5 | 3.75 | 20 |
| 13 | 194H | Commission /Brokerage | 15000 | 5 | 3.75 | 20 |
| 14 | 194I | Rent of – Plant/Machinery/Equipment | 240000 | 2 | 1.5 | 20 |
| – Land and Building/Furniture & Fixture | 10 | 7.5 | 20 | |||
| 15 | 194IA | Transfer of certain immovable property other than agriculture land | 50 lakh | 1 | 0.75 | 20 |
| 16 | 194IB | Rent by Individual/ HUF | 50000 per month | 5 | 3.75 | 20 |
| 17 | 194IC | Payment under Joint Development Agreements to Individual/HUF | – | 10 | 7.5 | 20 |
| 18 | 194J | Professional Fees | 30000 | 10 | 7.5 | 20 |
| 194J | Technical Fees (w.e.f. 01.04.2020) | 30000 | 2 | 1.5 | 20 | |
| 194J | Payment to call centre operator (w.e.f. 01.06.2017) | 30000 | 2 | 1.5 | 20 | |
| 194J | Director’s fees | NIL | 10 | 7.5 | 20 | |
| 19 | 194K | Payment of any income in respect of (a) units of a mutual fund as per section 10(23D); or (b) the units from the administrator; or (c) units from specified company (w.e.f. 01.04.2020) | 5000 | 10 | 7.5 | 20 |
| 20 | 194LA | Compensation on transfer of certain immovable property other than agriculture land | 250000 | 10 | 7.5 | 20 |
| 21 | 194LBA | Income from units of business trust | ||||
| – interest received or receivable from a special purpose vehicle; or | – | 10 | 7.5 | 20 | ||
| – dividend referred to in sub-section (7) of section 115-O | 10 | 7.5 | 20 | |||
| 194LBA | Distribution of rental income to unit holders | – | ||||
| – Other than Company | 10 | 7.5 | 20 | |||
| – Company | 10 | 7.5 | 20 | |||
| 22 | 194LBB | Income in respect of units of investment fund | – | |||
| – Other than Company | 10 | 7.5 | 20 | |||
| – Company | 10 | 7.5 | 20 | |||
| 23 | 194LBC | Income in respect of investment in securitization fund | – | |||
| – Individual/HUF | 25 | 18.75 | 25 | |||
| – Company | 30 | 22.5 | 30 | |||
| – Other Person | 30 | 22.5 | 40 | |||
| 24 | 194M | Payment to commission, brokerage etc. by Individual and HUF | 5 | 3.75 | 20 | |
| 25 | 194 O | TDS on e-commerce particular | 1 | 0.75 | 20 | |
Chart of TCS rate changes wef 14.05.2020 for financial year 2020-21
| S. No | Section of the Income-tax Act | Nature of Receipts | Till 13/05/2020 | From 14/05/2020 to 31/03/2021 |
| 1 | 206C(1) | Sale of | ||
| (a) Tendu Leaves | 5% | 3.75% | ||
| (b)Timber obtained under a forest lease | 2.50% | 1.88% | ||
| (c) timber obtained by any other mode | 2.50% | 1.88% | ||
| (d) Any other forest produce not being timber/tendu leaves | 2.50% | 1.88% | ||
| (e) scrap | 1% | 0.75% | ||
| (f) Minerals, being coal or lignite or iron ore | 1% | 0.75% | ||
| 2 | 206C(1C) | Grant of license, lease, etc. of | 2% | 1.50% |
| (a) Parking lot | ||||
| (b) Toll Plaza | 2% | 1.50% | ||
| (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 | 0.10% | 0.075% |
| (w.e.f 01.10.2020) | ||||
Note – No changes in TCS rate of Alcoholic liquor for human consumption and Indian made foreign liquor. (Applicable rate -1%)
Author Bio
whats is TCS rate for sale of goods w.e.f. 01.10.20 for section 6CR
while filling quartely tcs statement which lower deductions certificate number should be entered in the statement..
From 14/05 /2020 to 31/05/ 2020 tds chart date
since tds rate are reduced from 14th May-2020, what is rate to be chargeable wheater 10% or 7.5%,, Pls suggest,,,,
what is tds rate on rent for the month of may-2020, since tds rate reduce on 14th May-2020,,, whether its 10% of 7.5%,, pls suggest Urgently,,
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I really wonder as to why this unnecessary exercise in the garb of putting more money in the hands of assessee. After all full tax is to be paid and there is no reduction in Advance Tax or extension of time limit.. I feel that someone in the Government feels that they have done a great favour to the assessees
Great