Reduction in rate of Tax Deduction at Source (TDS) & Tax Collection at Source (TCS)- as per press release 13th May, 2020

In order to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic, the rates of Tax Deduction at Source (TDS) for the following non-salaried specified payments made to residents has been reduced by 25% for the period from 14^th May, 2020 to 31^st March, 2021:-

S. No	Section of the Income- tax Act	Nature of Payment	Existing Rate of TDS	Reduced rate from 14/05/2020 to 31/03/2021
1	193	Interest on Securities	10%	7.5%
2	194	Dividend	10%	7.5%
3	194A	Interest other than interest on securities	10%	7.5%
4	194C	Payment of Contractors and sub-contractors	1% (individ- ual/HUF) 2% (others)	0.75% (indi- vidual/HUF) 1.5% (others)
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%	7.5%
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 ma- chinery	2%	1.5%
12	194-I(b)	Rent for immovable prop- erty	10%	7.5%
13	194-IA	Payment for acquisition of immovable property	1%	0.75%
14	194-IB	Payment of rent by indi- vidual or HUF	5%	3.75%
15	194-IC	Payment for Joint Devel- opment Agreements	10%	7.5%
16	194J	Fee for Professional or Technical Services (FTS), Royalty, etc.	2% (FTS, cer- tain royalties, call centre) 10% (others)	1.5% (FTS, certain royal- ties, call cen- tre)        7.5% (others)
17	194K	Payment of dividend by Mutual Funds	10%	7.5%
18	194LA	Payment of Compensa- tion on acquisition of im- movable property	10%	7.5%
19	194LBA(1)	Payment of income by Business trust	10%	7.5%
20	194LBB(i)	Payment of income by In- vestment fund	10%	7.5%
21	194LBC(1)	Income by securitisation trust	25% (Individ- ual/HUF) 30% (Others)	18.75% (Indi- vidual/HUF) 22.5% (Oth- ers)
22	194M	Payment to commission, brokerage etc. by Individ- ual and HUF	5%	3.75%
23	194-O	TDS on e-commerce par- ticipants	1% (w.e.f. 1.10.2020)	0.75%

2.   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 31^st March, 2021:- 

S. No	Section of the In- come-tax Act	Nature of Receipts	Existing Rate of TCS	Reduced rate from 14/05/2020 to 31/03/2021
1	206C(1)	Sale of
		(a) Tendu Leaves	5%	3.75%
		(b)Timber obtained under a for- est lease	2.5%	1.875%
		(c) timber obtained by any other mode	2.5%	1.875%
		(d) Any other forest produce not being timber/tendu leaves	2.5%	1.875%
		(e) scrap	1%	0.75%
		(f) Minerals, being coal or lig- nite or iron ore	1%	0.75%
2	206C(1C)	Grant of license, lease, etc. of (a) Parking lot	2%	1.5%
		(b) Toll Plaza	2%	1.5%
		(c) Mining and quarrying	2%	1.5%
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%

 

3.   Therefore, TDS on the amount paid or credited during the period from 14^th May, 2020 to 31^st March, 2021 shall be deducted at the reduced rates specified in the table in para 1 above. Similarly, the tax on the amount received or debited during the period from 14^th May, 2020 to 31^st March, 2021 shall be collected at the reduced rates specified in the table in para 2 above.

4.    It is further stated that there shall be no reduction in rates of TDS or TCS, where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar. For example, if the tax is required to be deducted at 20% under section 206AA of the Income-tax Act due to non-furnishing of PAN/Aadhaar, it shall be deducted at the rate of 20% and not at the rate of 15%.