Revised TDS/TCS Rate Applicable As Per Covid Economic Relief Package Applicable For All Kinds Of Payments W.E.F. 14th May 2020.
Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman has announced today Reduction in Rates of Tax Deduction at Source (TDS) and ‘Tax Collected at Source (TCS). The TDS rates for payment to residents other than Salary, and tax collected at source rate will be reduced by 25 percent of the specified rates for the remaining period of FY 2020-21 i.e. from 14.05.2020 to 31.03.2021.
Though, in the speech by the Hon. Finance Minister, she mentioned that TDS rates shall be reduced on all types of payments made, a press release by the Government late night has given the list of Sections where the reduced rates are applicable. The TDS will be continued to be charged at original rates on all other sections as also to all payments made to non-residents.
TDS Rate Chart for F.Y. 2020-21 (A.Y: 2021-22) after considering changes w.e.f. 14.05.2020
Kindly Note amended rates are been given on the basis of PIB Notification dated 13.05.2020 and on the date of Publication of this post no notification in this regard is been notified by the CBDT. Press release can be accessed at the following link- https://pib.gov.in/PressReleasePage.aspx?PRID=1623745
| Section | Nature of payment | Threshold Limit | Till 13/05/2020 | From 14/05/2020 | ||
| Resident | Non-resident* | Resident | Non-resident* | |||
| Rs. | TDS Rate (%) | TDS Rate (%) | TDS Rate (%) | TDS Rate (%) | ||
| 192 | Salaries | – | Normal slab rate | Normal slab rate | Normal slab rate | Normal slab rate |
| 192A | Premature withdrawal from EPF | 50000 | 10 | 10 | 10 | 10 |
| 193 | Interest on securities – 8% Savings (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 during the financial year | 10000 | 10 | 0 | 7.5 | 0 |
| 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 | – |
| 194 | Dividends | 5000 | 10 | – | 7.5 | – |
| 194A | Interest (Banking co., co-operative society engaged in banking, post office) | 50000 | 10 | – | 7.5 | – |
| 194A | Interest (Any other person) | 5000 | 10 | – | 7.5 | – |
| 194B | Winning from lotteries | 10000 | 30 | 30 | 30 | 30 |
| 194BB | Winning from Horse race | 10000 | 30 | 30 | 30 | 30 |
| 194C | Contractor-Single transaction-Individual/HUF | 30000 | 1 | – | 0.75 | – |
| -Others | 2 | 0- | 1.5 | – | ||
| 194C | Contractor – Consolidated Payment During the F.Y. | 100000 | ||||
| – Individual/HUF | 1 | – | 0.75 | 0- | ||
| – Others | 2 | – | 1.5 | – | ||
| 194C | Transporter (44AE) declaration with PAN | – | 0 | 0 | 0 | 0 |
| 194D | Insurance commission – Other than Company | 15000 | 5 | 0 | 3.75 | 0 |
| – Company | 10 | 0 | 7.5 | 0 | ||
| 194DA | Maturity of Life insurance policy | 100000 | 5 | 0 | 3.75 | 0 |
| 194E | Non-resident sportsmen or sports association | – | NA | 20 | NA | 20 |
| 194EE | NSS | 2500 | 10 | 10 | 7.5 | 10 |
| 194F | Repurchase units by MFs | – | 20 | 20 | 15 | 20 |
| 194G | Commission-Lottery | 15000 | 5 | 5 | 3.75 | 5 |
| 194H | Commission /Brokerage | 15000 | 5 | 0 | 3.75 | 0 |
| 194I | Rent of – Plant/Machinery/Equipment | 240000 | 2 | 0 | 1.5 | – |
| – Land and Building/Furniture & Fixture | 10 | 0 | 7.5 | – | ||
| 194IA | Transfer of certain immovable property other than agriculture land | 50 lakh | 1 | 0 | 0.75 | – |
| 194IB | Rent by Individual/HUF | 50000 per month | 5 | 0 | 3.75 | – |
| 194IC | Payment under Joint Development Agreements to Individual/HUF | – | 10 | 0 | 7.50 | 0 |
| 194J | Professional Fees | 30000 | 10 | 0 | 7.5 | 0 |
| 194J | Technical Fees (w.e.f. 01.04.2020) | 30000 | 2 | 0 | 1.5 | 0 |
| 194J | Payment to call centre operator (w.e.f. 01.06.2017) | 30000 | 2 | 0 | 1.5 | 0 |
| 194J | Director’s fees | NIL | 10 | 0 | 7.5 | 0 |
| 194K | Payment of any income in respect of | 5000 | 10 | 0 | 7.5 | 0 |
| (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) | ||||||
| 194LA | Compensation on transfer of certain immovable property other than agriculture land | 250000 | 10 | 0 | 7.5 | 0 |
| (TDS exempted if covered under RFCTLARR Act w.e.f. 01.04.2017) | ||||||
| 194LB | Income by way of interest from infrastructure debt fund | – | 0 | 5 | 0 | 5 |
| 194LBA | Income from units of business trust | |||||
| – interest received or receivable from a special purpose vehicle; or | – | 10 | 5 | 7.5 | 5 | |
| – dividend referred to in sub-section (7) of section 115-O | 10 | 10 | 7.5 | 10 | ||
| 194LBA | Distribution of rental income to unit holders | – | ||||
| – Other than Company | 10 | 30 | 7.5 | 30 | ||
| – Company | 10 | 40 | 7.5 | 40 | ||
| 194LBB | Income in respect of units of investment fund | – | ||||
| – Other than Company | 10 | 30 | 7.5 | 30 | ||
| – Company | 10 | 40 | 7.5 | 40 | ||
| 194LBC | Income in respect of investment in securitization fund | – | ||||
| – Individual/HUF | 25 | 30 | 18.75 | 30 | ||
| – Company | 30 | 40 | 22.5 | 40 | ||
| – Other Person | 30 | 30 | 22.5 | 30 | ||
| 194LC | Income by way of interest by an Indian specified company to a non-resident/foreign company on foreign currency approved loan / long-term infrastructure bonds from outside India | – | 0 | 5 | 0 | 5 |
| 194LC | Income by way of interest by an Indian specified company on rupee denominated bond / any long-term bonds from outside India, which is listed only on a recognized stock exchange located in any International Financial Services Centre | – | 0 | 4 | 0 | 4 |
| 194LD | Interest on certain bonds from Govt. securities | – | 0 | 5 | 0 | 5 |
| 194M | Certain payments by Individual/HUF | 50 lakh | 5 | 0 | 3.75 | 0 |
| 194N | Payment of certain amount in cash | 1 Crore | 2 | 2 | 2 | 2 |
| 194N | Payment of certain amount in cash (first proviso of section 194N- assessee has not furnished return for last 3 assessment years ) if- |
20 Lakh | ||||
| – Amount is more than Rs.20 lakh but up to Rs. 1 crore | 2 | 2 | 2 | 2 | ||
| – Amount exceeds Rs. 1 crore | 5 | 5 | 5 | 5 | ||
| 194-O | Applicable for e-commerce operator for the sale of goods or provision of services facilitated by it through its digital or electronic facility or platform (w.e.f. 01.04.2020) | – | 1 | 0 | 0.75 | 0 |
| 195 | Income of Investment made by an NRI | – | 0 | 20 | 0 | 20 |
| 195 | Long-term capital gain | – | ||||
| – Under Section – 115E/112(1)(c)(iii)/112A | 0 | 10 | 0 | 10 | ||
| – Any Other Gains | 0 | 20 | 0 | 20 | ||
| 195 | Short-term capital gain – 111A | – | 0 | 15 | 0 | 15 |
| 195 | Royalty | – | 0 | 10 | 0 | 10 |
| 195 | Fees for technical services | – | 0 | 10 | 0 | 10 |
| 195 | Interest income payable by Govt./Indian concern (other than section 194LB or 194LC) | – | 0 | 20 | 0 | 20 |
| 195 | Any Other Income – Other than Company | – | 0 | 30 | 0 | 30 |
| – Company | 0 | 40 | 0 | 40 | ||
| 196A | Income in respect – | – | 0 | 20 | 0 | 20 |
| – of units of a Mutual Fund specified under clause (23D) of section 10; or | ||||||
| – from the specified company referred to in the Explanation to clause (35) of section 10 | ||||||
| 196B | Income from units to an offshore fund | – | 0 | 10 | 0 | 10 |
| 196C | Income from foreign currency bonds or GDR of an Indian company | – | 0 | 10 | 0 | 10 |
| 196D | Income of foreign Institutional Investors from securities (not being interest referred to in section 194LD, not being dividend referred in section 115-O, not being capital gain from transfer of securities referred in section 115AD) | – | 0 | 20 | 0 | 20 |
| * TDS rate shall be increased by applicable surcharge and Health & Education Cess. | ||||||
No Reduction in rate of TDS where the tax is required to be deducted at higher rate due to non furnishing of PAN/ Aadhaar.
TDS rates for Salaried persons and Non Resident Persons shall remain unchanged and old rates shall apply as usual.
The TDS on the amount paid or credited during the period from 14th May 2020 to 31st March 2021 shall be deducted at the reduced new rates as specified in the above table. Similarly the tax on the amount received and debited during the period from 14th May 2020 to 31st March 2021 shall be collected at new rates as specified in the table.
This relaxation only applies to payment made between 14th May 2020 and 31st March 2021. So this will not cover payments made before 14th May 2020.
TCS Rate Chart for F.Y. 2020-21 (A.Y: 2021-22) after considering changes w.e.f. 14.05.2020
| Section | Nature of payment | Till 13/05/2020 | From 14/05/2020 |
| TCS Rate (%) | TCS Rate (%) | ||
| 206C | Scrap | 1 | 0.75 |
| 206C | Tendu leaves | 5 | 3.75 |
| 206C | Timber obtained under a forest lease or other mode | 2.5 | 1.875 |
| 206C | Any other forest produce not being a timber or tendu leaves | 2.5 | 1.875 |
| 206C | Alcoholic liquor for human consumption and Indian made foreign liquor | 1 | 1 |
| 206C | Parking lot, toll plaza, mining and quarrying (other than mining and quarrying of mineral oil, petroleum and natural gas) | 2 | 1.5 |
| 206C | Minerals, being coal or lignite or iron ore | 1 | 0.75 |
| 206C | Sale of motor vehicle of the value exceeding Rs. 10 Lacs | 1 | 0.75 |
| 206C | Remittance out of India under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year | 5% (Wef 01.10.2020) | 5% (Wef 01.10.2020) |
| 206C | Sale of overseas tour programme package | 5% (Wef 01.10.2020) | 5% (Wef 01.10.2020) |
| 206C | Remittance out of India for education under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year | 0.5%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education. – 5% In any other (wef 01.10.2020) |
0.5%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education.
– 5% : In any other case. (wef 01.10.2020) |
| 206C | Sale of any goods (other than goods exported out of India or goods given in the above points) of the value exceeding 50 Lacs | 0.1 (Wef 01.10.2020) | 0.075 (Wef 01.10.2020) |
No Reduction in rate of TCS where the tax is required to be collected at higher rate due to non-furnishing of PAN/ Aadhaar.
Compiled By M/S. Sanjay Thampy & Associates, Chartered Accountants
Please note article is been amended after publication to give effect to press release issued by Ministry of Finance.
Disclaimer: The contents of this article are for information purposes only and does not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional. Please refer to the complete Terms & Disclaimer here. Terms & Disclaimer
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Dear sir.. we are making payment for the bus operators for their service provided from september 2019 to November 2019 under section 194c. The bill was in letter pad and no date mentioned , the payment will made in and around June.. what rate of tds should I deduct.. pls reply sir..
Invoice Date is 12.05.2020, But Credited In our Books on 18.05.2020 & Payment Also made After 18.05.2020, what is TDS rate New rate? Or Old rate?
sir
If the supply of goods and vendor’s bill is of date 10 may, but payment is made after 14th may, we should deduct TDS at the old rates as the TDS is deducted on accrual of payment basis, which was before 14th May. This is my opinion. Need your guidance.
Sir,
i have received invoice on dated 18.05.20 but invoice date is 30.04.20 then what is the rate of TDS is applicable
Hi,
pls let me know if Party gives us TDS declaration on Professional fees @ 4% till June 2020. so TDS will deduct as per the new rate or 4% ?
Sir the bill date is 13.05.2020 but received 14.05.2020 and booked 14.05.2020 in this case what is the tds rate for contract old or new
Helo Sir,
Can you please through some light on the below query.
TDS rates for a FY is specified in respective Finance Act. Therefore, any changes in TDS rate has to be effected by way of Amendment to that Finance Act. Since Parliament is not in session, hence is expected that the Hon’ble President will cause to issue an Ordinance to give effect to these changes announced by the Hon’ble FM on 13th May 2020 and the Ordinance will come into force from the day it is signed by the President. Para 5 of the Press release clearly mentions that legislative changes are being proposed.
Therefore, unless Ordinance is promulgated reduced rate of TDS cannot be applied
Hi Sanjay
Just wanted to confirm from you regarding the vendor payment for the service procured in the month of April’2020 and the vendor invoice date was dated 30th of April’2020 but expenses are going to be booked in the books of accounts after 14th of May’2020. In such cases what will be the TDS rates to be deducted from the vendor payment?
Please suggest.
Waiting for your quick response. Thank you in advance.
Hi Sir, We want to send an emails to all our clients for revised rate of TDS, what should we write in email for better understanding.
Mr Sanajy,
Under which notification / circular TDS rates effected.
Dear Sir,
if we have pass the provision for audit fees expenses for FY 2019-20 and now we will make the payment after 14th May’20, then TDS rate will be applicable old or new
What are the consequences of not following the reduced rates of TDS. If I deduct 10% instead of 7.5%, will there be any penal consequences.
If I have raised a bill on 15.5.2020 but PART payment of which has been made before 14.5.2020 then which rate will be applicable? whether whole amount will attract old rate or revised rate? or Previous rate on part payment and revised rate on the rest amount? please clarify
What is due date of TDS return for Q4 Fy 19-20
While the finance ministry has announced these measures, the tax portals like NSDL are yet to update the new rates and are forcing you to apply the old rates even till today when you are making TDS payments esp for TDS on purchase of immovable property or rent. Any idea as to when these would change.
Received an invoice dated 5th May 2020. Will be processing for payment on 18th May 2020. Will TDS be applicable as per old or new rates?
Sir, Thank you for your reply. Provision for expenses are done on the basis of estimates at the year end (31st March 2020) and accordingly TDS is deducted on such provisions (like out of pocket exp to auditor, which may or may not match with contract amount). Hence, there is possibility of actual expenses may increase or decrease and resultant TDS on the same. In case of increase of expenses, TDS on increased amount will have to be charged at reduced rate and if there is decrease, the TDS deducted at the time of provision will be considered (old rates of TDS) and balance amount will be paid to the vendor. Am I correct?
Sir, If the TDS deducted in Provision on consultancy charges @ 10% on Rs.10000/- as at 31/03/20 but final invoice received on 14th May 2020 of Rs.15000/-, what will be the total amount of TDS on consultancy charges?
The notification did not mention about section- 194D in case of domestic companies. It only talks about section- 194 D in case of individuals.
What will be the rate of TDS?
HELLO SIR, I WOULD LIKE TO KNOW WHETHER TDS WILL BE DEDUCTED IN CREDIT CO.OPERATIVE SOCIETIES
Sir if i have raised a bill on 15.3.2020 but PART payment of which has been made before 14.3.2020 then which rate will be applicable? whether whole amount will attract old rate or revised rate? or Previous rate on part payment and revised rate on the rest amount? please clarify
bill dated 31.03.2020 for works pertaining to march 2020. now processing for payment …will it be the new rate or old one?
Dear Sanjay
Glad that you are responding to every comment. Can we start applying lower TDS rate based on Press release? Should we not wait till legislative amendment is done?
if my bill 31 march 2020 and today done the payment 15.05.2020 what rate application of tds ( old rate or new rate w.e.f 14.05.2020
Due dates for TDS and TCS ?
Hello Sir,
Will these reduced rates even apply in case where TDS is deducted as per section 197, wherein a reduced rate of TDS is levied ?
Or will it work as say 194C, 194J r/w 197 so reduced rate will apply?
When the TDS is reduced and tax filing dates are changed but no mention is made on the advance tax payment dates. Hence the TDS reduction will amount to higher payment at the time of advance tax or the incidence of interest will be higher . Please clarify
Sir,
If the bill date is before 14/05/20 then which tax rate is applicable previous or the new one. Plz suggest?
what if my invoice pertain to April 2020 but booking is 14th may 2020? should i deduct TDS @ reduced rate or normal rate?
If the amount exceeds threshold limit indicated in the table, reduced TDS rates will not apply. Please confirm.
TDS on fees is reduced to 7.5 percent, thereby the money come to the consultants hands. But what about the tax burden overall for the financial year. If the tax payer is 20 percent category, whether he has to pay 12.5 per cent taking into account the deduction of 7.5 percent. If it is so, at the end of the year he has to make more tax payments. Would it mean it is only postponement of the tax payment in the instant case. Pl.clarify.
Regards
Divakaran
Hi All,
Few our vendors have raised today 14/05/ but for which services has already been received..So what @ rate TDS should be deducted…Normal rate or (Normal rate -25% of Normal rate)??
Your valuable suggestion will be highly appreciated
HI,
At what rate TCS on coal is to be charged if party has provided lower rate certificate of 0.80%?? (Because old rate is 1% and new rate is 0.75%)
Will your reply be different if lower certificate is with 0.20%?
Sir, you mentioned that sec 206 C – TCS @0.1 % on sale of goods > 50 lakhs W.e.f 01.10.2020 – Can share the relevant notification of the same. Actually it is applicable from 01.04.2020 from Finance Act 2020.
tax collected at source rate will be reduced by 25 percent of the specified rates for the remaining period of FY 20-21 i.e. from 14.05.2020 to 31.03.2020
i hope this should be till 31.03.2021
reduced by 25 percent of the specified rates for the remaining period of FY 20-21 i.e. from 14.05.2020 to 31.03.2020.
Pl. revise to 31.03.2021
Hi,
please change the year in the below mentioned line given for your reference
(FY 20-21 i.e. from 14.05.2020 to 31.03.2020).
It will be 31.03.2021
Is this 25% reduction rate applicable to Lower Rate Deduction Certificate?
ANY CIRCULAR AND NOTIICATION
14.05.20 to 31.03.21 not 31.03.20, please change it
It is a futile exercise by the Ministry of finance and nothing but eye wash. Instead Deduction of 10% of Gross Total Income could have been given, which would have been a great relief for the suffering Income Tax Payers
Sanjay ji,
Pls clarify.
1) Bill dated & received on 15-04-2020. Credited in books and old TDS rates applied. Now making payment on 15-05-2020 then what about tds rate. Whether reduced or old rates to be applied!?
2) On 31st March 2020, provisions of expenses made in books and old TDS rates applied and deposited. Now on bill receiving how to adjust the difference of tds.
Thanks in advance..
Hi, What about those who have lower TDS? Should that also be slashed by 25%
Hi Sanjay, Thank you for the valued information.
Could you please let me what percentage of TDS to be ducted if one provided consultancy services for a full month in May -20?
Do we need to deduct TDS @ 10% till 13-05-2020 thereafter, 7.5% from 14-05-2020 by split into the bill? Is the same theory applies to all the cases such as Contractors/Rent etc..?
Kindly advice.
Thank you,
-Kumar
Hi Sanjay, Thank you for the valued information.
Could you please let me what percentage of TDS to be ducted if one provided consultancy services for a full month in May -20?
Do we need to deduct TDS @ 10% till 13-05-2020 thereafter, 7.5% from 14-05-2020 by split into the bill? Is the same theory applies to all the cases such as Contractors/Rent etc..?
Kindly advice.
Thank you,
-Sravan
Reduction in Rates of ‘Tax Deduction at Source’ and ‘Tax Collected at Source” – The TDS rates for all non-salaried payment to residents, and tax collected at source rate will be reduced by 25 percent of the specified rates for the remaining period of FY 20-21.
As per press release TCS on liquor for human consumption 206C not mentioned.
Thus TCS old rate 1% shall apply.
Correct if wrong?
Sir ji please correct the date 31.03.2020 to 31.03.2021
Dear sir,
Please correct the revised rate applicable upto 31.03.2021, instead of 31.03.2020 in your statement.
Hi Sanjay, the reduction in TDS rate is effective for residents only not for non-residents.