Finance Act, 2020 has made certain changes in TDS provisions further to provide relief to the taxpayers against hardship caused by COVID-19 Hon. Finance Minister announced reduction in certain TDS rates for period 14 May 2020 to 31 March 2021. The summary of TDS rates applicable for AY 2021-22 is as follows:

Tax Deducted at Source (TDS) Rate Chart for FY 2020-21 (AY 2021-22)

Section
Resid-ential Status of De ductee #8
Nature of   Payment
Monetary Limit
Rate (01/04/ 2020 to 13/05/ 2020)
Rate (14/05/ 2020 – 31/03/2021 ) #7
Remarks (Changes made by Finance Act, 2020)
192
R/NR
Salaries
Normal Slab Rate
Normal Slab Rate
#1, #2
192-A
R/NR
Premature withdrawal from Employee Provident Fund
50,000
10%
7.5%
193
R
Interest on securities
10,000
10%
7.5%
194
R
Dividend other than the dividend as referred to in Section 115-O (i.e. Dividend on which Dividend Distribution Tax is not paid)
5,000
10%
7.5%
Limit has been increased to 5,000
194-A
R
Interest other than interest on securities- Others
5,000
10%
7.5%
#3
R
Banks (Time deposits / Recurring deposits)
40,000 (For individual) & 50,000 (for Senior Citizens)
10%
7.5%
R
Deposit in Co-operative Bank & Post offices
R
Interest by Co-operative Society (other than Co-operative Bank)
40,000 (For individual) & 50,000 (for Senior Citizens)
10%
7.5%
#5
194-B
R/NR
Winning from Lotteries
10,000
30%
30%
194-BB
R/NR
Winnings from Horse Race
10,000
30%
30%
194-C
R
Payment to Contractor
30,000 ( Single Txn) 1,00,000 (Aggregate During the Financial year)
For Individual & HUF- 1% &  for Others- 2%
For Individual & HUF – 0.75% &  for Others – 1.5%
#3, #6
R
Payment to Transporter covered u/s 44AE & submit declaration (i.e. owning less than 10 goods carriages)
194-D
R
Insurance Commission
15,000
Domestic Company – 10%
Other Resident – 5%
Domestic Company – 7.5%
Other Resident – 3.75%
194-DA
R
Payment in respect of life insurance policy w.e.f. 01/09/2019, the tax shall be deducted on the amount of income comprised in insurance pay-out. Note- Before 01/09/2019 Rate was 1% on maturity Amount.
1,00,000
5%
3.75%
194-E
NR
Non resident Sports person or association
                   –
20%
20%
194-EE
R/NR
Payments out of deposits under National Savings Scheme
2500
10%
7.50%
194-F
R/NR
Repurchase Units by Mutual Funds
20%
15%
194-G
R/NR
Commission – Lottery
15,000
5%
3.75%
194-H
R
Commission / Brokerage ( No TDS on brokerage on public issues, stock exchange transactions & commission to underwriters)
15,000
5%
3.75%
#3
194-I
R
Rent – Land and Building – furniture & fittings (if property is owned by more than one person then limit of 2,40,000 will be applied to each co-owner)
2,40,000
10%
7.50%
#3
R
Rent – Plant / Machinery / equipment
2%
1.50%
194-IA
R
Transfer of certain immovable property other than agriculture land
50,00,000
1%
0.75%
194-IB
R
Rent – Land or building or both (By Individual / HUF not liable to Tax audit)
50,000 Pm or part of the month
5%
3.75%
#4
194-IC
R
Payment of Monetary consideration under Joint development agreement
10%
7.50%
194-J
R
Payment to Calls Centres
30,000
2%
1.50%
#3
R
Technical Services Payment (other than Professional Services)
30,000
2%
1.50%
Reduction in TDS rates
R
Royalty for sale, distribution or exhibition of cinemato-graphic films
30,000
2%
1.50%
Reduction in TDS rates
R
Professional Fees and Royalty-Others
30,000
10%
7.50%
194-K
R
Payment of any income (other than in nature of Capital Gains) in respect of Units of Mutual fund as per section 10(23D) or Units of administrator or from a specified company.
5000
10%
7.50%
Newly Intro-duced
194-LA
R
TDS on compensation for compulsory acquisition of immovable Property
2,50,000
10%
7.50%
194- LBA
R/NR
Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV to its unit holders. (if the SPV has exercised the option under section 115BAA)
Resident- 10%
Non Resident- 5%
Resident- 7.5%
Non Resident – 5%
R/NR
Business trust shall deduct tax while distributing dividend to its unit holders.
Resident- 10%
Non Resident- 5%
Resident- 7.5%
Non Resident- 5%
Newly Introduced
R/NR
Business trust shall deduct tax while distributing any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders.
Resident- 10%
Non Resident- 30*
Resident- 7.5%
Non Resident- 30*
194- LB
NR
Income by way of interest from infrastructure debt fund (payable to non-resident)
5%
5%
194-LBB
R/NR
Income in respect of units of Investment funds
Resident- 10%
Non Resident- 30*
Resident- 7.5%
Non Resident- 30*
194-LBC
R/NR
Income in respect of investment in securitisation trust
For Individual / HUF-25%, Others- 30%
NR-30*
For Individual / HUF -18.75%, Others- 22.5%,
NR-30*
194-LC
NR
Income by way of interest by an Indian specified company to a non-resident / foreign company on foreign currency approved loan   (Note : Now TDS at concessional rate of 5% will be applicable for borrowings made after April 1, 2020 but before July 1, 2023.)
5%
5%
NR
Income by way of interest by an Indian specified company to a non-resident / foreign company on foreign currency approved long term infrastructure bonds/Rupee deninominated bond from outside India ( Note : Now TDS at concessional rate of 5% will be applicable for borrowings made after April 1, 2020 but before July 1, 2023.)
5%
5%
NR
Income by way of interest by listed IFSC to a non-resident / foreign company on long term infrastructure bonds/Rupee denominated bonds from outside India   ( Note : Now TDS at concessional rate of 5% will be applicable for borrowings made after April 1, 2020 but before July 1, 2023.)
4%
4%
194- LD
NR
Income by way of Interest on a rupee denominated bond of an Indian company and Govt. Securities to FII or QFI (Note : Now TDS at concessional rate of 5% will be applicable for borrowings made after April 1, 2020 but before July 1, 2023)
5%
5%
NR
Income by way of Interest on Municipal debt securities to FII or QFI (Note : for borrowings made after April 1, 2020 but before July 1, 2023)
5%
5%
Newly Intro-duced
194-M
R
Payment of Commission, brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J. Note: Sec. 194M will be effective from 01/09/2019 onwards
50,00,000
5%
3.75%
#4
194-N
R/NR
Cash withdrawal in excess of Rs. 1 crore during P.Y-
A) Filed the returns of income for all of the three A.Y relevant to the three P.Y and cash withdrawals exceeding 1 cr.
1,00,00,000
2%
2%
R/NR
B) Not Filed the returns of income for all of the three A.Y relevant to the three P.Y: (This provision is applicable w.e.f. 01/07/2020)
i. Cash withdrawals from 20 Lacs to 1 Crore
20 lacs to 1 Cr
2%
2%
Newly Introduced
R/NR
ii. Cash withdrawals exceeding 1 Crore
> 1Cr
2% till 30/06/ 2020 &
5% from 01/07/ 2020
2% till 30/06/ 2020 &
5% from 01/07/ 2020
Newly Introduced
194-O
R/NR
Applicable for Ecommerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform. ( Note: This Sec. is inserted by FA 2020 & applicable from 01/10/2020)
500000 (for Individual and HUF on furnishing PAN/Aadhaar)
1%   (in case PAN or Aadhaar not produce by E-Commerce then- 5%)
0.75% (in case PAN or Aadhaar not produce by E-Commerce then- 5%)
Newly Introduced
195
NR
Other Payments to Non-Resident / Foreign Company
DTAA Rate or Rate in Force
DTAA Rate or Rate in Force
NR
(a) Income from investment made by a Non-Resident Indian Citizen
20%*
20%*
NR
(b) LTCG referred to in Section 115E
10%*
10%*
NR
(c) LTCG referred to in Section 112(1)(c)(iii)
10%*
10%*
NR
(d) LTCG referred to in Section 112A
10%*
10%*
NR
(e) STCG under Section 111A
15%*
15%*
NR
(f) Any other LTCG [not covered by Section 10(33), 10(36) and 10(38)]
20%*
20%*
NR
(g) Interest Income on moneys borrowed or debt incurred in foreign currency (not being interest referred to in Sec. 194LB or 194LC or 194LD)
20%*
20%*
NR
(h) Royalty for transfer of rights in respect of copyright in any book or computer software referred to in Section 115A(1A).
10%*
10%*
NR
(i) Royalty [not of the nature referred to in (g) above] payable in pursuance of an agreement approved by the Central Govt. / it is in accordance with industrial policy.
10%*
10%*
NR
(j) Fees for technical services payable in pursuance of an agreement approved by the Central Govt. / it is in accordance with industrial policy.
10%*
10%*
NR
(k) Any other income
30%*
30%*
196-B
R/NR
Income from units
10%
10%
196-C
R/NR
Income from foreign currency bonds or GDR (including long-term capital gains on transfer of such bonds) (not being dividend)
10%
10%
196-D
R/NR
Income of FIIs from securities
20%
20%

Notes:

1. Additional time provided to the eligible start up, in case of TDS on income by way of perquisite under section 17(2)(vi) [esop, sweat equity etc.]. Additional time will be fourteen days after the earlier of the following:

a) 48 months from relevant AY

b) date of sale of these security or sweat equity

c) date of leaving the employment

2. TDS on salary is to be deducted as per individual’s slab rate. From AY 2020-21, Individuals are given option to pay tax either as per the existing slab rates or as per new slab rates newly introduced under Finance Act 2020. Accordingly employers have to deduct TDS on salary as per tax slab option opted by its employees. Thus from current year employers has to take addition details about option opted along with the proposed tax investment declaration, which it takes at the beginning of the year for deduction of TDS as per slab rate.

3. In case of Section 194A, 194C, 194H, 194I and 194J earlier individual and HUF were required to deduct TDS only when their accounts are liable to Audit in section 44AB in PY. Now, the Finance Act 2020, says all individuals & HUF will be liable to deduct TDS if, the turnover had cross Rs. 1 Crore in case of business and Rs. 50 Lakhs in case of profession in previous year. Thus delinking the requirement of deducting TDS with tax audit.

4. In case of Section 194-IB and 194M earlier individual and HUF were required to deduct TDS only when their accounts are NOT liable to Audit in section 44AB in PY. Now, as per the Finance Act 2020, all individuals & HUF will be liable to deduct TDS if, the turnover is less than Rs. 1 Crore in case of business or Rs. 50 Lakhs in case of profession in previous year. Thus delinking the requirement of deducting TDS with tax audit.

5. Now Co-operative Society will be required to deduct TDS only u/s 194A if: Total Sales/Gross Receipts/Turnover exceeds Rs. 50 crores in immediately preceding financial year.

6. From this financial year onwards, TDS under 194C will be required even for manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from the associates of the customer’s associate. Earlier it was required in case for manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from the customer.

7. There is no change in TDS rates of 192, 194B, 194BB, 194E, 194N, for non residents and other TDS rates which were equal to maximum tax rate in force. The reduced rate will be applicable for period 14 May 2020 till 31 March 2021.

8. R= Resident ; R/NR = Resident or Non Resident; NR = Non Resident.

9. If PAN is not provided rate of TDS will be 20% or the applicable rate whichever is higher. 10.

10. * Ed. Cess Surcharge as applicable

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