As per the Central Board of Direct Taxes (CBDT), the benefit of lower TDS and TCS rate can only be availed by resident individuals and is not available to non-resident Indian (NRI) taxpayers.
Finance Minister Sithdraman in her press conference on Wednesday announced several measures for MSMEs, NBFCs and taxpayers. She unveiled details of the Rs 20 lakh crore economic package. In order to enhance liquidity in the hands of taxpayers, FM announced a reduction in the rate of tax deducted at source (TDS) and tax collection at source (TCS) by 25%.
However, there are some categories of taxpayers who will not be avail to avail the benefit of this cut: As per the existing rules, TDS rates differ based on whether or not the taxpayer has furnished the Permanent Account Number (PAN) or Aadhaar to the deductor. Taxpayers who fail to furnish their PAN or Aadhaar, 20% or higher TDS can be charged.
CBDT Press Release: Reduction in rate of Tax Deduction at Source (TDS) & Tax Collection at Source (TCS)
New rates not applicable if Aadhaar/PAN not furnished:
The CBDT release said, "There shall be no reduction in rates of TDS or TCS, where the tax is required to be deducted or collected at a 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 the rate of 15%." This means that taxpayers who have not provided PAN or Aadhaar to the deductor, lower rates will not be applicable to you.
Here is the table of existing & new reduced TDS, TCS rates:
TDS Rate Chart for FY 2020-21 Pre & Post 14th May 2020:
| 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% | 7.50% |
| 2 | 194 | Dividend | 10% | 7.50% |
| 3 | 194A | Interest other than interest on securities | 10% | 7.50% |
| 4 | 194C | Payment of Contractors and sub-contractors | 1% (individual/HUF) | 0.75% (individual/HUF) |
| 2% (others) | 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% | 7.50% |
| 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 machinery | 2% | 1.50% |
| 12 | 194-I(b) | Rent for immovable property | 10% | 7.50% |
| 13 | 194-IA | Payment for acquisition of immovable property | 1% | 0.75% |
| 14 | 194-IB | Payment of rent by individual or HUF | 5% | 3.75% |
| 15 | 194-IC | Payment for Joint Development Agreements | 10% | 7.50% |
| 16 | 194J | Fee for Professional or Technical Services (FTS), Royalty, etc. | 2% (FTS, certain royalties, call centre) | 1.5% (FTS, certain royalties, call centre) |
| 10% (others) | 7.5% (others) | |||
| 17 | 194K | Payment of dividend by Mutual Funds | 10% | 7.50% |
| 18 | 194LA | Payment of Compensation on acquisition of immovable property | 10% | 7.50% |
| 19 | 194LBA(1) | Payment of income by Business trust | 10% | 7.50% |
| 20 | 194LBB(i) | Payment of income by Investment fund | 10% | 7.50% |
| 21 | 194LBC(1) | Income by securitisation trust | 25% (Individual/HUF) | 18.75% (Individual/HUF) |
| 30% (Others) | 22.5% (Others) | |||
| 22 | 194M | Payment to commission, brokerage etc. by Individual and HUF | 5% | 3.75% |
| 23 | 194-O | TDS on e-commerce participants | 1% | 0.75% |
| (w.e.f. 1.10.2020) |
TCS Rate Chart for FY 2020-21 Pre & Post 14th May 2020:
| S. No | Section of the Income-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 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% | 0.08% |
| (w.e.f 01.10.2020) | ||||
Lowers rates only on non-salaried income:
It is worth mentioning that though TDS is charged on salary income, the relief in the form of lower TDS has only been offered on non-salaried income meaning your salary will continue to attract TDS at the same rate of tax as earlier. The new lower rates of TDS and TCS will be effective till March 31, 2021. Note that the rate of TDS ranges from 1% to 30% depending on the source of income, while the rate of TCS ranges between 0.10% and 5%.
No rate cut benefit for NRIs:
As per the government announcement, the benefit of lower TDS and TCS rate can only be availed by resident individuals and is not available to non-resident Indian (NRI) taxpayers.
CBDT further clarified that TDS on the amount paid or credit during the period from May 14, 2020, to March 31, 2021, shall be deducted at the reduced rates. Similarly, the tax on the amount received or debited during the period from 14th May 2020 to 31st March 2021 shall be collected at the reduced rates.
CBDT Press Release: Reduction in rate of Tax Deduction at Source (TDS) & Tax Collection at Source (TCS)
Know about us - https://thetaxsupport.com
You can find more articles on at https://thetaxsupport.com/blog
You can find tutorial videos on at https://www.youtube.com/c/vipinsanger
Comments