Union Finance Minister Mrs Nirmala Sitharaman, in order to provide more funds in the hands of the taxpayer during this coronavirus pandemic situation and as a part of economic relief package, has reduced the rate of Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) by 25% on the payments made to non-salaried residents persons.
These rates shall come into force from 14.05.2020 and will remain effective till 31.03.2021. Further, these reduced rates are applicable to all types of payment made to the resident person except in the case of payment of salary. So, in other words, TDS on salary will be deducted on slab rates as applicable to the individual as before this reduction. However on all other types of payments, TDS will be deducted at reduced rates.
Rates of TDS for FY 2020-21 and AY 2021-22
| S. No. | Section of Income Tax Act | Nature of Payment | TDS Rate (from 01.04.2020 to 13.05.2020) | TDS 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% (individual/HUF) 2% (others) |
0.75% (individual/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% |
| Â 9 | 194G | Commission, prize etc., on sale of lottery tickets | 5% | 3.75% |
| Â 10 | 194H | Commission or brokerage | 5% | 3.75% |
| Â 11 | 194-I(a) | Rent for plant and machinery | 2% | 1.5% |
| Â 12 | 194-I(b) | Rent for immovable property | 10% | 7.5% |
| Â 13 | 194-IA | Payment for acquisition of immovable property | 1% | 0.75% |
| Â 14 | 194-IB | Payment of rent by individual or HUF | 5% | 3.75% |
| 15 | 194-IC | Payment for Joint Development Agreements | 10% | 7.5% |
| Â 16 | 194J | Fee for Professional or Technical Services (FTS), Royalty, etc. | 2% (FTS, certain royalties, call centre) 10% (others) |
1.5% (FTS, certain royalties, call centre) 7.5% (others) |
| Â 17 | 194K | Payment of dividend by Mutual Funds | 10% | 7.5% |
| Â 18 | 194LA | Payment of Compensation on acquisition of immovable property | 10% | 7.5% |
| Â 19 | 194LBA(1) | Payment of income by Business trust | 10% | 7.5% |
| Â 20 | 194LBB(i) | Payment of income by Investment fund | 10% | 7.5% |
| Â 21 | 194LBC(1) | Income by securitisation trust | 25% (Individual/HUF) 30% (Others) |
18.75% (Individual/HUF) 22.5% (Others) |
| Â 22 | 194M | Payment to commission, brokerage etc. by Individual and HUF | 5% | 3.75% |
| Â 23 | 194O | TDS on e-commerce participants (w.e.f. 01.10.2020) | 1% | 0.75% |
Rates of TCS for FY 2020-21 and AY 2021-22
| S. No. | Section of Income Tax Act | Nature of Receipts | TCS Rate (from 01.04.2020 to 13.05.2020) | TCS 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 forest 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 lignite 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 (w.e.f. 01.10.2020) | 0.1% | 0.075% |
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